TIDM48FI
RNS Number : 1446E
Tokyo Electric Power Co Inc
25 May 2012
[TRANSLATION]
May 21, 2012
To whom it may concern:
Name of Company: The Tokyo Electric Power Company,
Incorporated
Name of Representative: Toshio Nishizawa, President
(Code: 9501 First Section of TSE, OSE and NSE)
Contact Person: Rikuo Ohtsuki,
Manager, Shareholder & Investor Relations Group,
Corporate Affairs Department
(TEL. 03-6373-1111)
Notice Regarding Issuance of Preferred Shares by Third Party
Allotment
On March 29, 2012, The Tokyo Electric Power Company,
Incorporated (the "Company") applied to the Nuclear Damage
Compensation Facilitation Corporation (the "Corporation"), for
financial support, including subscription for shares, pursuant to
the Act to Establish Nuclear Damage Compensation Facilitation
Corporation (Law No. 94, August 10, 2011; "Corporation Act"); on
May 9, 2012, the Corporation, following approval of the
Comprehensive Special Business Plan by the minister in charge, made
the decision to provide financial support to the Company. Thus the
Company, at its board of directors meeting held this day, passed a
resolution for issuance of shares for subscription (Class A
preferred shares and Class B preferred shares; collectively, the
"Preferred Shares") by way of third party allotment, with the
Corporation as allottee (the "Preferred Share Issuance"), subject
to approval of the resolution for increasing the total number of
authorized shares of the Company, etc. at its Ordinary General
Meeting of Shareholders scheduled for June 27 of this year, and
hereby announce as follows:
I. Purpose of the Preferred Share Issuance
We would like to take this opportunity once again to apologize
deeply for the tremendous suffering endured by those afflicted by
the accident at Fukushima Daiichi Nuclear Power Station in the wake
of the Tohoku-Chihou-Taiheiyou-Oki Earthquake of March 11, 2011, in
particular the residents of the neighboring region of the power
station, as well as for the great concern that we have caused for
our electricity customers and the broader society.
Since the accident at Fukushima Daiichi Nuclear Power Station,
the Company has been compensating those afflicted by damage while
receiving from the Corporationfunds needed for such compensation.
However, with the recording of huge expenses and losses in the wake
of the accident and the increase in fossil fuel expenses following
the shutdown of nuclear power stations, etc., expenses and losses
other than from compensation for damage have ballooned, and the
Company's financial standing has deteriorated sharply. As a result,
net assets for the Company on a non-consolidated basis as of the
end of FY2011 showed a decrease of more than 2 trillion yen from
the level of net assets before earthquake disaster (the amount of
net assets at the end of the third quarter of FY2010 was 2.6364
trillion yen), to 527.4 billion yen, and the Company's
capitalization ratio fell to approximately 3.5%.
Further, even though the Company received roughly two trillion
yen in emergency financing from financial institutions in March
2011 and its balance of cash and cash equivalents as of the end of
FY2010 was 2.1343 trillion yen, there was need for investments to
maintain functionality of electricity business facilities and for
large corporate bond redemptions in addition to the increase in
fossil fuel costs; for these and other reasons, cash and cash
equivalents as of the end of FY2011 had fallen to 984.9 billion yen
(excluding the statutory financial support from the
Corporation).
The Company will work towards a thorough group-wide management
streamlining through achieving cost reductions surpassing the
target set in the Action Plan to Promote Reform, developed in
December 2011 (i.e., 2.6488 trillion yen), accelerating sales of
assets and otherwise. Nevertheless, even if electricity rates are
raised to the minimum extent on top of such management
streamlining, a net loss of 105 billion yen is expected for FY2012;
as this financial weakness continues, there are even concerns that,
if the projection of the estimated entire amount to be compensated
increases or other event causes deterioration in earnings and
expenditures, the Company's liabilities may exceed its total
assets. Moreover, with the significant fall in the Company's
ability to procure financing autonomously, it has become difficult
to procure the funds necessary for fuel procurement and facility
investment that are indispensable for the stable supply of
electricity, as well as the funds for the systematic investment
necessary for decommissioning Units 1 through 4 of Fukushima
Daiichi Nuclear Power Station (the "Decommissioning"); as long as
these conditions continue, the staff expansion for facilitating
payment of future compensation and acceleration of the
Decommissioning will not be possible.
In order for the Company to avoid these excess liability risks
and cash-flow risks and ensure the continuation of business, and to
be able to make an early return to the publicly offered bonds
market and otherwise rapidly regain its ability to procure funds
autonomously, the Company must start with increasing its capital
and strengthening its financial basis. For this reason, the Company
began considering the amount of a capital increase and the possible
subscriber.
Article 41, Paragraph 1, Item 2 of the Corporation Act provides
that subscription for shares issued by a nuclear operator is one of
the possible financial support measures to help ensure swift and
due compensation for nuclear damage, stable electricity supply, and
smooth operation of other businesses relating to the operation of
nuclear reactors. As discussed above, the purpose for this share
issuance matches the objectives of financial support pursuant to
the Corporation Act, and moreover, given the scale of the amount
needed and the urgency of the situation, the Company determined
that its best option was to apply to the Corporation for
subscription for shares.
On March 29, 2012, on the basis of this determination, the
Company applied to the Corporation, seeking financial support
including subscription for shares issued by the Company
(subscription in a total amount of one trillion yen). After that,
the Company worked with the Corporation to formulate a
Comprehensive Special Business Plan that includes the subscription
for the shares in one trillion yen. On April 27, 2012, the
Corporation and the Company applied to the minister in charge for
approval of the plan, and on May 9, 2012, after receiving the
approval of the minister in charge, the Company received notice
from the Corporation of its decision to provide financial support,
including the subscription of shares.
With this background, at the board of directors meeting held
today, the Company passed a resolution for the Preferred Share
Issuance with the Corporation as allottee, subject to approval of
the resolution for the increase in the total number of authorized
shares of the Company and other necessary agenda items at the
Ordinary General Meeting of Shareholders scheduled for June 27,
2012.
Going forward, based on our financial basis strengthened by this
capital increase, and in accordance with the Comprehensive Special
Business Plan, the Company will strive to achieve, concurrently,
the implementation of swift and due compensation to those afflicted
by damage, steady progress in the Decommissioning and ensuring of
stable electricity supply, and to enhance the Company's enterprise
value through thorough management streamlining and effective
utilization of managerial resources cultivated by the Company.
II. Overview of the Comprehensive Special Business Plan
(approved on May 9, 2012)
1. Basic Philosophy in Formulating the Comprehensive Special
Business Plan
The accident at Fukushima Daiichi Nuclear Power Station has
raised issues that can be called "national problems posed to every
generation", i.e., compensation for those afflicted by damage,
decommissioning of nuclear reactors, and ensuring stable and
efficient electricity supply. The Company has a fundamental
awareness that it is facing these problems simultaneously and in a
compounded manner; being the entity liable for compensating those
afflicted by damage and for decommissioning the stricken plants,
and an entity with duties under law to supply electricity, directly
responsible for stable electricity supply, the Company will employ
every measure and meet its responsibilities head on to attain
"compensation, Decommissioning and stable supply,"
simultaneously.
2. The Company's Basic Policy for Business Operation
On the three principles underlying the direction in which the
"New TEPCO" is headed -"Taking Responsibility," "Shifting to an
Open TEPCO," and "Innovating Energy Services together with
Customers and the Society," the Company will take the following
measures:
To begin with, the Company will fulfill its responsibility in
regards to compensation with empathy and consideration,
implementation of steady Decommissioning, holding down the
electricity rates, and ensuring a stable electricity supply and
safe facilities. Throughout these activities, the Company will
thoroughly streamline its present management.
The Company will take measures directed towards the prompt,
proactive and easy-to-understand disclosure of information to those
afflicted by damage, customers and the broader society, and tackle
with introducing a managerial style that listens to voices of
customers and the society, reforming corporate governance and
organizations, and reforming the procurement practice to ensure
fair and transparent trade. The basis of these reforms will be the
reform of its corporate consciousness, which will be achieved
simultaneously.
The Company will also take the perspective of customers to
respond to their diverse needs, and will switch to a business model
pivoting more on competition and alliance, thereby innovating
energy services.
3. Measures for Management Streamlining
The Company will, in accordance with the Comprehensive Special
Business Plan, move forward with thorough cost reductions, asset
sales and other managerial streamlining. Specifically, the
streamlining will be divided into the following three phases:
"Ordinary Streamlining," where measures that can be implemented
quickly are executed collectively (Phase 1); "Structural
Streamlining," where the streamlining gets further into
top-to-bottom procurement structure and the operation of personnel
system (Phase 2); and "Strategic Streamlining," where the Company's
business strategy itself is changed and alliances with entities
outside the Company will be sought (Phase 3), with the specific
measures of (i) through (iii) below to be taken.
(i) Thorough cost reductions
All expenses will have cost reduction strategies, and in
addition to the comprehensive reductions of recurring expenses in
Phase 1, the streamlining will go further to reviewing investment
plans and implementing structural reforms; through such measures,
the Company will achieve a "cost reduction exceeding 3.365 trillion
yen over 10 years" in the 10 years from the time of formulation of
the Emergency Special Business Plan until 2021, which such figure
includes an additional cost reduction of 656.5 billion yen.
(ii) Review of capital investment plan
In respect to the capital investment plan for supply facilities
and distribution (system) facilities, the Company will, compatibly
with the prerequisite of maintaining stable supply, carry out a
review of the plan from the perspective of thorough management
streamlining over the medium-to-long term. By implementing
strategies to reduce peak demand, the Company will achieve
reductions in capital expenditure that would otherwise be required
in summer 2020 for supply of approximately 3.27 million kW, as
compared to the time of formulation of the Emergency Special
Business Plan. Moreover, in regards to supply facilities, from the
perspective of restraining a large amount of capital expenditure,
the Company will carry out tenders for the construction and
replacement of all thermal power stations, with the exception of
power stations for which investments have been initiated; this will
achieve reductions in capital expenditure totaling 797.2 billion
yen during the 10 years through 2021. Further, with respect to
distribution facilities, by reducing investments that would turn
out to be unnecessary and by reviewing facility specifications, in
light of the trends and circumstances taking into account the
future demand and future power source composition or otherwise, a
121.3 billion yen reduction in capital expenditure will be achieved
during the 10 years through 2021.
(iii) Asset sales
In respect to asset sales, the "Action Plan to Promote Reform"
will be accelerated to the maximum extent possible, with the sales
taking place far ahead of the schedule. Those subsidiaries and
affiliates that were categorized not "to be sold" but "to be
retained" at the the time of preparation of the Emergency Special
Business Plan will also be subject to action plans for cost
reduction. The entire group will take up the task of thorough
management streamlining.
4. Business Reform
For each business field, alliances with IPP businesses and other
outside businesses will be aggressively promoted, and by providing
users with a variety of options to meet their diversifying needs of
electricity, the Company will achieve an "Energy Service
Innovation". Specifically, the measures of (i) through (iii) below
will be taken.
(i) More stable and less expensive fuel procurement and greater
efficiency in thermal power stations through alliances with other
businesses
a. Greater efficiency in thermal power stations
The Company will move aggressively towards replacing old
facilities to achieve greater efficiency, and in doing so, will
carry out tenders for construction and replacement of all
facilities, except for those projects for which the investment has
been initiated. In addition, by selling or lending the Company's
assets to other businesses, and thus having them replace those
assets instead, the Company will keep its own facility investment
costs to a minimum, while at the same time effectively utilizing
the assets it possesses.
b. Strategic business development aimed at more stable and less
expensive fuel procurement
By bringing greater efficiencies to fuel intake operations, the
Company will increase its uses of LNG thermal power generation,
which is relatively less expensive. Moreover, the Company will
enhance joint construction and operation of fuel-related facilities
with external partner businesses, for example, moving forward to
more efficient operation of tanks, berths, pipelines and other
facilities, as well as construction of such facilities together
with gas and oil companies. Further, the Company will seek greater
diversity in fuel sources, including unconventional sources, as
well as in price determination formulas, and, with the aim to
contribute to the forming of alliances for more intensive fuel
procurement, will be proactive in reaching out to other
energy-related companies and government agencies. Further, while
taking into consideration of financial restraints, the Company will
deepen its involvement in the upstream sectors of fuel procurement
and participate in joint investment projects targeting the
upstream.
c. Utilization of facility operation know-how in developing
countries
The Company will participate in IPP businesses in emerging
overseas markets through providing technical consulting services,
utilizing its facility operation know-how for new and advanced LNG
thermal power stations and other facilities. This will contribute
to easing supply/demand imbalances across the world, and will also
result in expanded revenues.
(ii) Making the power transmission and distribution divisions
neutral with greater transparency
a. Ample information disclosure and greater fairness
By utilizing the supply capabilities and power source
developments of other businesses, as well as the power-saving
capabilities of customers, the Company will aim to reduce the fuel
costs for supply and demand adjustment as well as future capital
expenditure. For such purposes, the Company will proactively
disclose information relating to supply and demand, system
operation and system load, and the Company's network enhancement
cost.
b. Open and expanded procurement and deployment of smart meters
from domestic and overseas suppliers
In procuring smart meters, the Company will undertake a major
procurement reform of introducing international bidding and seeking
opinions of outside the Company. In addition, by 2018, the Company
will intensively deploy roughly 17 million smart meters in
households (further, by no later than 2023, achieve installation of
27 million smart meters in all residences), seeking to materialize
the world's "smartest" society.
(iii) New businesses in the retail sector
a. Restraints on peak demand through energy-saving
incentives
By bringing greater diversity to fee menus and developing energy
management businesses in collaboration with external businesses
parties, the Company will provide customers with energy-saving
incentives as well as reduced rates.
b. New services and businesses matching the needs of
customers
For large scale customers (contracting for 500kW or more
electricity), the Company will address needs which were not fully
matched heretofore, and through attaining synergy effects through
alliances with other businesses, will develop and introduce new
energy services. Specifically, the Company will provide electricity
generated by a combination of diverse energy sources, including
natural energy, and will otherwise develop services that are
tailored to respective customer needs and provide high degrees of
satisfaction, thereby increasing revenues. For other customers-who
may, for example, wish to use electricity that comes from natural
energy sources-the Company will, in the future, provide green fees
and otherwise offer service menus that enable customers to make
their own choices.
c. New services for households by utilizing smart meters
In conjunction with the full-fledged deployment of smart meters
in the residential sector, the Company will prepare a fee menu that
offers households energy-saving incentives during peak use hours;
this will reduce customers' expenses and will also lead to
restraints on facility investment and fuel costs. Furthermore,
through alliances with external partner business parties, the
Company will develop new services, such as optimized control of
home electrical appliances through collaboration with home energy
management systems ("HEMS").
5. Consciousness reform
In order to reform the consciousness of the Company, the
following three reform measures will be taken.
(i) Governance reform: transition to a "company with committees"
(iinkai secchi kaisha)
With the approval of the Company's Ordinary General Meeting of
Shareholders in June of this year (i.e., approval concerning
amendment to the Company's Articles of Incorporation), the Company
will change its managerial mechanism to a company with committees
(iinkai secchi kaisha), and will adopt a policy of having a
managerial structure where a board of directors composed mainly of
persons from outside the Company formulates important managerial
strategy and supervises the execution of business, while executive
officers (shikkou-yaku) and corporate officers (shikkou-yakuin),
who will be primarily persons from the Company, will execute the
business. The number of directors on the board will be slimmed down
substantially from the present level. Further, by creating a staff
department that reports directly to the Chairman of the Board and
the President and by increasing the supervisory functions of the
Chairman, the Company will have in place a system that enables the
Chairman and President to exhibit strong leadership.
(ii) Organizational reform: introduction of an "in-house company
system"
In order to clarify the mission and revenue/cost structures of
each department, and to improve transparency to the outside, an
"in-house company system" will be introduced. In this regard, an
"In-house Company Transition Plan" will be formulated shortly in
FY2012, and the thermal and fuel department will become an
"in-house company" in the second half of FY2012 and each of the
retail department and transmission/distribution department will
become an "in-house company" around April 2013. For the medium
term, the Company will, while monitoring progress in the reform
measures and status of the power system reform, consider
intra-group company splits and/or shifting to a holding company
structure.
(iii) Personnel system reform: transition to a new personnel
system
A new personnel system befitting the "New TEPCO" will be
introduced in the first half of FY2013. Specifically, while
restraining overall personnel costs, by setting new missions for
individual employees, introducing external assessment, greater
reflection of performance in pay and promotion, and making team
leader an official rank, seniority-based salary elements will be
reduced and performance-based pay will be thoroughly implemented.
Moreover, through setting rules for and encouraging personnel
transfers among all departments, including the "in-house
companies", internal organizations being excessively
vertically-structured will be prevented, and by strengthening ties
among departments and expanding employees' field of vision, the
reform will be promoted.
6. Strengthening of financial basis
(i) Details of the requests for cooperation made to financial
institutions
The Company is aiming to return to a financial footing as firm
as its standing prior to the nuclear accident (on March 11, 2011);
in addition, in order to secure the funds for payment of
compensation for nuclear damage and the funds necessary for
ensuring stable electricity supply, as a request for cooperation
under the Comprehensive Special Business Plan, the Company
requested the following to financial institutions with which it had
transaction and that had loan claims against the Company (i.e.,
financial institutions that are the creditors for loan claims
existed as of March 11, 2011; hereinafter the same).
a) Until the time that the Company recovers its ability to
procure financing autonomously by returning to the publicly offered
bonds market or otherwise (under the Comprehensive Special Business
Plan, until the end of March 2015), all financial institutions
continue to extend credit in the form of refinancing etc., in
accordance with the results of consultations with the Corporation
and the Company.
b) In accordance with the results of consultations with the
Corporation and the Company, the major financial institutions
promptly grant new loans or short-term lines of credit (such as
commitment lines), thereby providing roughly one trillion yen in
additional credit (i.e., injection of "new money"), inclusive of
the restored funds described in (c) below (the "restoration").
c) Financial institutions that received payments from the
Company from March 11, 2011 through the end of September 2011
provide, concurrently with the equity contributions by the
Corporation and in accordance with the results of consultations
with the Corporation and the Company, the Company with funds in an
amount equivalent to any such payments received.
(ii) Thorough improvement of financial condition through the
Corporation's equity contribution
To be capable of making full compensation, undertaking
Decommissioning and ensuring stable electricity supply pursuant to
the Comprehensive Special Business Plan, the Company must
strengthen its financial basis so that it can make a quick return
to the publicly offered bonds market and otherwise recover its
ability to raise funds autonomously; for this purpose, subject to
approval at the Company's general meeting of shareholders of the
resolutions of increasing the total number of authorized shares and
other necessary agenda items, the Corporation will subscribe for
shares in the Company through capital increase by way of third
party allotment (subscription in total amount of one trillion yen).
In subscribing for the shares, to ensure improvement of the revenue
structure through the Company's intensive managerial reform and to
ensure that there will be mutually compatible solutions to the
three issues of "compensation, Decommissioning and stable supply",
the Corporation will, at the time of subscription, acquire voting
rights exceeding one half of all voting rights through class shares
with voting rights, and will also subscribe to convertible
non-voting class shares that will enable the Corporation to obtain
additional voting rights, meaning that the Corporation will
potentially hold more than two-thirds of all voting rights. Either
at the stage the Corporation determines that the completion of the
Company's intensive management reform is foreseen with a certain
level of confidence, or that the Company is autonomously raising
funds in the publicly offered bonds market, the Corporation will
convert a part of its class shares with voting rights into
convertible non-voting class shares or take other measures, thereby
reducing its ratio of voting rights held to under one half of all
voting rights; thereafter, to an extent and at a timing that will
not have an adverse impact on the Company's managerial reform,
through the Company's buyback of shares owned by the Corporation,
by sale of those shares on stock markets following conversion into
common shares or other measures, the Corporation will aim to
recover the full amount of its investment at an early stage.
(iii) Details of the request for cooperation made to
shareholders
The equity contribution by the Corporation is an unavoidable
measure in order for the Company to ensure implementation of
"compensation, Decommissioning and stable supply". Such Preferred
Share Issuance will result in the relative dilution of the common
shares held by current shareholders. That said, the Company make
efforts to gain understanding among our shareholders regarding the
necessity for the Corporation's contribution and its obtaining of
voting rights, and the Company will also make efforts so that the
shareholders will, at the general meeting of shareholders in June
this year, pass resolutions for approving the amendments to the
Articles of Incorporation regarding the increase in the total
number of authorized shares and the issuance of class shares, and
other resolutions necessary for the contribution by the
Corporation.
Further, in light of the harsh financial conditions in which the
Company finds itself following the accident, the Company refrained
from paying year-end dividend for FY2011 and interim dividend for
FY2012, and from the perspective of minimizing the burden on the
Japanese citizen, the Company will continuously refrain from paying
dividends for the time being; we will ask for the understanding
from shareholders in this respect.
(iv) Supply and demand forecasts and earnings and expenditures
forecasts
a. Supply and demand forecasts
With respect to the summer of FY2012, because the reactor unit 6
at Kashiwazaki-Kariwa Nuclear Power Station was shut down for
periodic inspection on March 26 of this year, all of the Company's
nuclear power stations are offline. However, in addition to the
construction of emergency power sources and otherwise securing
additional supply capacity, the Company will expand and enhance its
use of supply and demand adjustment agreements and otherwise
utilize demand restraint strategies to ensure there are appropriate
extra supply capabilities. Further, from FY2013, the Company will
continue to ensure balanced supply and demand of electricity
through starting operation of new power sources and establishing
combined-circles of emergency power sources, etc.
b. Rate revisions
Since the Tohoku-Chihou-Taiheiyou-Oki Earthquake, the Company
has faced a sharp increase in fuel costs due to the increased
reliance on fossil fuel sources in conjunction with the decrease in
nuclear power output; in addition, because of the construction of
emergency power sources to ensure stable electricity supply,
expenses have been increasing for structural reasons. The Company
is implementing a thorough management streamlining based on the
Comprehensive Special Business Plan and is reducing expenses to the
extent possible. However, it is extremely difficult to cover the
increase in fuel and other expenses.
If the current fee levels are maintained, an operating loss will
be unavoidable, and the Company will get weaker financially,
bringing the risk of being unable to effect smooth compensation
payments, steadily enact Decommissioning, or ensure stable
electricity supply. To avoid such a circumstance, the Company is at
the view that it has no choice but to ask customers to endure an
increase in electricity charges. We are keenly aware that such an
increase in electricity charges will impose a great burden on the
lives and commercial activities of our customers. Based on such
awareness, the Company will, on the fundamental principles of "full
disclosure of information and provision of intelligible
explanation," "offering charge structure that reduce the burden on
customers to the extent possible" and "thorough management
streamlining," make efforts to gain our customers'
understanding.
On the aforementioned assumptions, we plan to apply to the
Minister of Economy, Trade and Industry for minimum rate revisions
pursuant to Article 19, Paragraph 1 of the Electricity Business
Act, promptly after approval of the Comprehensive Special Business
Plan.
c. Earnings and expenditures
In FY2011, the tremendous increase in fuel expenses caused
forecasts of large losses at the operating profits stage; starting
from FY2012, however, as we made the assumptions of increased
revenue from rate revisions and decreased expenses from the
resumption of operations at Kashiwazaki-Kariwa Nuclear Power
Station starting from FY2013, operating income/losses are expected
to be; an operating loss of 264.7 billion yen in FY2012 but
operating income of 171.5 billion yen in FY2013 and 347.8 billion
yen in FY2014.
7. Measures for clarifying managerial responsibility
As part of the Company's measures for clarifying managerial
responsibility in regards to the nuclear accident, in June 2011,
the then President and the Vice President in Charge of Nuclear
Power resigned, and further measures such as returning or reducing
of officers' compensations and otherwise have been implemented.
Now that the Company has applied to the Corporation for a large
amount of financial support in the form of a share subscription in
addition to funding for compensation, and has asked both financial
institutions and shareholders to provide a considerable degree of
cooperation, and that a new system leading to the establishment of
the "New TEPCO" is coming in place through execution of the
Comprehensive Special Business Plan, the Company will take the
following measures for further clarification of managerial
responsibility.
- At the Ordinary General Meeting of Shareholders in June of
this year, all directors and auditors will resign, and, with
limited exception, will not be reappointed.
- Director/auditor gratuities (i.e., gratuities under the former
gratuities system, approved upon abolition of such system) will be
waived (including bonuses for persons who retired but have not
received payment).
- Until the Ordinary General Meeting of Shareholders in June of
this year, the reductions in compensation for directors and
corporate officers will continue (similar compensation reduction
will be applied to auditors as well).
- Advisor (komon) system will be abolished (implemented on the
end of March 2012).
8. Ensuring performance of the Comprehensive Special Business
Plan
The basic stance of the Company's new management following the
close of the Ordinary General Meeting of Shareholders in June of
this year will be, the management promoting managerial reform
pursuant to the Comprehensive Special Business Plan and the
Corporation providing backup as well as monitoring the progress of
reform. To ensure performance of the Comprehensive Special Business
Plan, the Corporation will, through dispatching directors,
executive officers and others to the Company, participate in the
Company's decision-making at the board of directors, etc., assist
the Chairman of the Board and the President in promoting the
reform, and monitor the management streamlining.
9. Description of the Financial Support
In order to ensure swift compensation payment by the Company,
the Corporation is going to provide the Company with 2 trillion and
426.2 billion yen for compensation of damage, which such amount is
obtained by deducting 120 billion yen that has been received
already as "compensation measures", from 2 trillion and 546.2
billion yen, which is the estimated entire amount to be
compensated.
Further, to be capable of making full compensation, undertaking
Decommissioning and ensuring stable electricity supply pursuant to
the Comprehensive Special Business Plan, the Company must
strengthen its financial basis so that it can make a quick return
to the publicly offered bonds market and otherwise recover its
ability to raise funds autonomously; for this purpose, subject to
approval at the Company's general meeting of shareholders of the
resolutions of increasing the total number of authorized shares and
other necessary agenda items, the Corporation will subscribe for
shares in the Company through capital increase by way of third
party allotment (subscription in total amount of one trillion
yen).
Further, in such an event, the parties concerned need to be
fully aware of the notion that the said subscription for shares,
the provision of new credit by financial institutions and the rate
revision compose a single and indivisible measure for the purposes
of "compensation, Decommissioning and stable supply."
III Preferred Share Issuance Schedule
May 21, 2012: Resolution at the meeting of the Board of
Directors
- Convocation of the Ordinary General Meeting of
Shareholders
- Determining the terms and conditions of the Preferred Share
Issuance, subject to approval of the meeting of shareholders
- Execution of share subscription agreement with the
Corporation
June 27, 2012: Ordinary General Meeting of Shareholders
(scheduled)
- Amendment to the Articles of Incorporation
- Delegating the board of directors the decision of terms and
conditions of the Preferred Share Issuance
July 25, 2012: Completion of payment by the Corporation
(scheduled)
IV. The Preferred Share Issuance by Third Party Allotment
Following receipt of the notice from the Corporation of its
decision of providing financial support, including subscription for
shares, the Company plans to implement the Preferred Share Issuance
by way of third party allotment, the overview of which is described
below. Due to the Preferred Share Issuance, existing shares are
expected to be diluted. Please refer to the overview set forth
below for details.
Please note that the Company plans to include the agenda items
necessary for the Preferred Share Issuance in the agenda items
submitted to the Ordinary General Meeting of Shareholders scheduled
for June 27 of this year and the Preferred Share Issuance is
subject to the following: approval of the respective resolutions at
such Ordinary General Meeting of Shareholders for amending the
Articles of Incorporation, including introduction of articles
related to the Preferred Shares, delegating the decision regarding
the Preferred Share Issuance to the board of directors, and
electing the directors nominated by the Corporation; completion of
other procedures necessary for commencing the Preferred Share
Issuance, and none of such procedures being canceled; execution of
loan agreement and other related contracts with financial
institutions; and the absence of any event that would adversely
affect the Company's implementation of the Special Business Plan
(except for such minor event that would not hinder the
Corporation's decision to subscribe for the Preferred Shares), and
other conditions.
1. Overview of Offering (1) Overview of Class A preferred
shares
(1) Payment date From July 11, 2012 until
July 25, 2012 (*)
------------------------- ---------------------------------
(2) Number of new 1,600,000,000 shares
shares to be issued
------------------------- ---------------------------------
(3) Issue price 200 yen per share
------------------------- ---------------------------------
(4) Total amount 320,000,000,000 yen
of issue price
------------------------- ---------------------------------
(5) Amount of paid-in 100 yen per share
capital to be increased
------------------------- ---------------------------------
(6) Total amount 160,000,000,000 yen
of paid-in capital
to be increased
------------------------- ---------------------------------
(7) Method of offering Third-party allotment; all
or allotment (allottee) shares will be allotted
to the Corporation
------------------------- ---------------------------------
(8) Other The above items are all
subject to the approval
of resolutions necessary
for the Preferred Share
Issuance at the Ordinary
General Meeting of Shareholders
scheduled for June 27, 2012,
and other conditions described
above.
For details, please refer
to Attachment IV-1-(1)
------------------------- ---------------------------------
* July 25, 2012 is planned to be the payment date. That said,
the payment period under the Companies Act is resolved as from July
11, 2012 until July 25, 2012, and, depending on the timing when the
conditions precedent for closing under the share subscription
agreement between the Company and the Corporation are satisfied,
the payment date may be advanced within the range of the payment
period mentioned above.
(2) Overview of Class B preferred shares
(1) Payment date From July 11, 2012 until July
25, 2012 (*)
------------------------- ---------------------------------
(2) Number of new 340,000,000 shares
shares to be issued
------------------------- ---------------------------------
(3) Issue price 2,000 yen per share
------------------------- ---------------------------------
(4) Total amount 680,000,000,000 yen
of issue price
------------------------- ---------------------------------
(5) Amount of paid-in 1,000 yen per share
capital to be increased
------------------------- ---------------------------------
(6) Total amount 340,000,000,000 yen
of paid-in capital
to be increased
------------------------- ---------------------------------
(7) Method of offering Third-party allotment; all
or allotment (allottee) shares will be allotted to
the Corporation
------------------------- ---------------------------------
(8) Other The above items are all subject
to the approval of resolutions
necessary for the Preferred
Share Issuance at the Ordinary
General Meeting of Shareholders
scheduled for June 27, 2012,
and other conditions described
above.
For details, please refer
to Attachment IV-1-(2)
------------------------- ---------------------------------
* July 25, 2012 is planned to be the payment date. That said,
the payment period under the Companies Act is resolved as from July
11, 2012 until July 25, 2012, and, depending on the timing when the
conditions precedent for closing under the share subscription
agreement between the Company and the Corporation are satisfied,
the payment date may be advanced within the range of the payment
period mentioned above.
2. Purpose and Reason for the Offering
As described in "I. Purpose of the Preferred Share Issuance"
above, in order for the Company to implement "compensation,
Decommissioning and stable supply" swiftly and steadily, it is
essential to strengthen its financial basis. Therefore, the Company
will raise capital through third party allotment of Class A
preferred shares and Class B preferred shares with the Corporation
as the allottee.
Two classes of shares, namely, Class A preferred shares, which
have voting rights (with put options the consideration of which is
Class B preferred shares or common shares), and Class B preferred
shares, which do not have voting rights (with put options the
consideration of which is Class A preferred shares or common
shares), are being issued; as set forth in "II. Overview of the
Comprehensive Special Business Plan," "6. Strengthening of
financial basis" "(ii) Thorough improvement of financial condition
through the Corporation's equity contribution" above, the reason
for issuing the said two classes of shares is to ensure the
Corporation to acquire more than one half of the total voting
rights through the Class A preferred shares, which are class shares
with voting rights, and to hold, potentially, more than two-thirds
of the total voting rights by subscribing to Class B preferred
shares, which are convertible non-voting class shares, enabling the
Corporation to acquire additional voting rights. To make possible
an early return to the publicly offered bonds market, the Company
will secure income through thorough managerial streamlining and
strategic business development, and steadily strengthen capital
through appropriate internal reserves while continuing payment of
the special assessments obligated under the Corporation Act. In
cases where the Corporation determines that the completion of the
Company's intensive management reform is foreseen with a certain
level of confidence, or that the Company is autonomously raising
funds in the publicly offered bonds market, the Corporation plans
to reduce the ratio of the voting rights it holds in the Company to
under one half of all voting rights (calculated on the basis not
including voting rights relating to dilutive shares), by converting
a portion of Class A preferred shares, which are class shares with
voting rights, to Class B preferred shares, which are convertible
non-voting class shares, or other measures. The goal for returning
to the publicly offered bonds market is the earliest possible
timing during the latter half of the decade of the 2010s.
It is expected that, in conjunction with the Preferred Share
Issuance, there will be a significant dilution of the existing
shares, which would impose great burden on the shareholders of the
Company; nonetheless, the Company decided that the Preferred Share
Issuanceto the Corporation is the best scheme because: (i)
strengthening the Company's financial basis and securing funds
through the Preferred Share Issuance are essential in order for the
Company to ensure its business continuity and to achieve
"compensation, Decommissioning and stable supply" simultaneously;
(ii) the planned total payment for subscription to the preferred
shares to be issued amounts to a huge amount of one trillion yen,
and given the urgency of this matter, no party but the Corporation
could be the subscriber; (iii) through possession of shares by the
Corporation, which is organized with approval from the government,
positive effects such as improvement of the Company's credit can be
expected; and, as described above, (iv) the Corporation is going to
reduce the voting rights held to under one half of the total voting
rights (calculated on the basis not including voting rights
relating to dilutive shares) when it determines that the completion
of the Company's intensive management reform is foreseen with a
certain level of confidence, or that the Company is autonomously
raising funds in the publicly offered bonds market, by converting a
portion of Class A preferred shares to Class B preferred shares, or
other measures.
In addition, in the share subscription agreement entered into
with the Corporation on May 21, 2012 (the "Share Subscription
Agreement"), the Company agreed to the following:
(1) Regardless of before or after the payment for the Preferred
Shares, the Company: (i) will not petition for insolvency
proceedings without the consent of the Corporation; (ii) will
obtain a prior written consent of the Corporation if it carries out
(a) disposal of surplus, (b) change in capital or legal reserves,
or reduction of voluntary reserve, (c) issuance or disposal of
shares, stock acquisition rights (shinkabu yoyakuken), bonds with
stock acquisition rights (shinkabu yoyakuken-tsuki shasai) and
other securities (except for issuance or disposal done in response
to demand for purchase of additional shares by shareholders having
less than one voting unit (tangen-miman kabunushi)) or acquisition
or cancellation of such securities (except for acquisition, etc.
from the Corporation), (d) structural reorganization, or (e) in
addition to (c) and (d) above, any act that would probably dilute
the ratio of the voting rights or shares held by the Corporation;
(iii) will consult with the Corporation in advance in case of (a)
convening, or deciding agenda items submitted to, a general meeting
of shareholders, (b) appointing or dismissing a member of the
nominating committee after the Company makes transition to a
company with committees (iinkai secchi kaisha), (c) amending or
abolishing rules of the board of directors, rules of the nominating
committee, or other material internal rules, or (d) deciding or
revising the budget for a business year; and (iv) will report in
writing to the Corporation if either of the following occurs: (a)
an event that is likely to have a material adverse effect on the
assets, management, finance, credit condition or future earnings
forecasts of the Company (including subsidiaries and affiliates) on
a consolidated basis, or (b) an event that is likely to have a
material adverse effect on the implementation of the Special
Business Plan.
(2) Prior to the payment for the Preferred Shares, the Company:
(i) will not carry out any material personnel change, structural
reorganization, loan procurement, creation of pledges, or other
acts that may cause material change in the assets, management,
finance, credit condition or future earnings forecasts on a
consolidated basis; (ii) will make the best effort to obtain the
approval of resolutions at the Company's Ordinary General Meeting
of Shareholders scheduled for June of this year, for the respective
agenda items of (a) the election of director candidates nominated
by the Corporation, (b) the prescribed amendments to the Articles
of Incorporation, and (c) the Preferred Share Issuance; (iii)
subject to obtaining approval of the relevant resolution at such
general meeting of shareholders, will carry out procedures for
approval of the rules of the board of directors, rules of the
nominating committee, and other internal rules, with contents
satisfactory to the Corporation; (iv) will carry out other
procedures necessary for the issuance of the Preferred Shares under
laws and regulations, the Articles of Incorporation, and other
internal rules, in addition to the said approval resolutions at the
general meeting of shareholders; and (v) will consult with the
Corporation in good faith towards reaching an agreement regarding
management and administration, operational structures and related
personnel matters following the Corporation's subscription for the
Preferred Shares.
(3) After the payment for the Preferred Shares, the Company (i)
will not delegate to executive officers matters that require prior
approval or prior consultation under the Share Subscription
Agreement, in addition to the matters prescribed in Article 416,
Paragraph 4 of the Companies Act; (ii) with respect to matters to
be determined at, or to be reported to, the board of directors,
will give notice to the Corporation with contents identical to the
those of the convocation notice to the directors, concurrently with
dispatching the convocation notice to the directors; and (iii) in
case the Corporation decides to launch a secondary offering of the
common shares, will provide full cooperation to such secondary
offering.
(4) If the Corporation intends to (a) increase the ratio of
voting rights held to two-thirds or more (calculated on the basis
of not including voting rights related to dilutive shares), or (b)
re-increase the ratio of voting rights held that was once reduced
to less than one-half pursuant to (5) below, to one-half or more,
the Corporation will, upon consultations with the Company, carry
out procedures to amend the approved Special Business Plan as
stipulated in Article 46, Paragraph 1 of the Corporation Act (in
such a case, the Company will apply jointly with the Corporation
for approval of an amendment to the approved Special Business Plan
in accordance with the determinations of the Corporation), and will
exercise the put option to increase the ratio of voting rights held
after obtaining approval of the minister in charge regarding such
amendments (however, the foregoing will not apply to the
Corporation's exercise of put option where common shares are
obtained as consideration, if the option is exercised for the
purpose of liquidating the Preferred Shares held by the Corporation
through sales of common shares in the market or the like).
(5) If the Corporation determines that (a) the completion of the
Company's intensive management reform is foreseen with a certain
level of confidence, or (b) that the Company is autonomously
raising funds in the publicly offered bonds market, the Corporation
will reduce the ratio of the voting rights it holds in the Company
to under one half of the total voting rights (calculated on the
basis not including voting rights relating to dilutive shares), by
exercising the put option of Class A preferred shares where Class B
preferred shares are obtained as consideration, and other
measures.
(6) If the ratio of the voting rights held by the Corporation
(calculated on a basis including voting rights relating to the
Class A preferred shares on the assumption that all Class B
preferred shares held by the Corporation have been converted to
Class A preferred shares) decreases to one-fifth or less, and
whenever thereafter upon the Company's request with showing
rational grounds, the Company and the Corporation will, in
consideration of the ratio of voting rights at the time, engage in
good faith consultation regarding the handling of the requirements
of prior consent, prior consultation, etc. as set forth in the
Share Subscription Agreement.
3. The amount, use and expected timing of expenditures for funds
to be procured, and the rationale underlying reasonableness of the
purpose of funds.
(1) Class A preferred shares
(i) Amount of funds Total amount to be paid in:
to be procured 320,000,000,000 yen
(approximate net (approximate net proceeds:
proceeds) 318,840,000,000 yen)
* Approximate amount of issuance
costs: 1,160,000,000 yen (expected)
(Breakdown: Registration-related
costs and advisory fees, etc.)
--------------------------- -------------------------------------
(ii) Specific purpose With respect to the aforementioned
of the procured approximate net proceeds for
funds and the scheduled Class A preferred shares and
timing of expenditure the approximate net proceeds
thereof for Class B preferred shares
as described below, in the
total amount of 996,360,000,000
yen, the funds are planned
to be used, from time to time
through around the end of
March 2015, for establishing
an adequate organization for
ensuring implementation of
swift and due compensation
for nuclear damage, and for
promoting steady Decommissioning
to the maximum extent, and
also as funds necessary for
maintaining stable electricity
supply. Until they are actually
disbursed, the funds will
be managed in the Company's
bank account.
--------------------------- -------------------------------------
(iii) Rationale As set forth in "I. Purpose
underlying reasonableness of the Preferred Share Issuance"
of purpose of procured above and this chapter (IV.
funds The Preferred Share Issuance
by Third Party Allotment)
"2. Purpose and Reason for
Offering," the issuance of
Class A preferred shares will
be carried out as part of
the Comprehensive Special
Business Plan and is essential
for the Company's business;
thus, we have determined that
the abovementioned purposes
of the funds are reasonable.
--------------------------- -------------------------------------
(2) Class B preferred shares
(i) Amount of funds Total amount to be paid in:
to be procured 680,000,000,000 yen
(approximate net (approximate net proceeds:
proceeds) 677,520,000,000 yen)
* Approximate amount of issuance
costs: 2,480,000,000 yen (expected)
(Breakdown: Registration-related
costs and advisory fees, etc.)
--------------------------- -------------------------------------
(ii) Specific purpose As set forth in "(1) Class
of the procured A preferred shares, (ii) Specific
funds and the scheduled purpose of the procured funds
timing of expenditure and the scheduled timing of
thereof expenditure thereof," above.
--------------------------- -------------------------------------
(iii) Rationale As set forth in "I. Purpose
underlying reasonableness of the Preferred Share Issuance"
of purpose of procured above and this chapter (IV.
funds The Preferred Share Issuance
by Third Party Allotment)
"2. Purpose and Reason for
the Offering," the issuance
of Class B preferred shares
will be carried out as part
of the Comprehensive Special
Business Plan and is essential
for the Company's business;
thus, we have determined that
the abovementioned purposes
of the funds are reasonable.
--------------------------- -------------------------------------
4. Reasonableness of the Terms and Conditions, etc. of the
Issuance
(1) Basis for calculation The Company considered various
of the amount to conditions that would impact
be paid in and specific the value of the Preferred
details thereof Shares, including share price
volatility, terms and conditions
of dividends for the Preferred
Shares, credit costs to be
borne by the shareholders of
Preferred Shares, and put options
by which common shares are
obtained as consideration,
and comprehensively taking
into account various matters
such as the Company's business
circumstances and financial
condition and the liquidity
of the Preferred Shares, decided
the terms and conditions for
the issuance of the Preferred
Shares (including the terms
and conditions contained in
the Share Subscription Agreement).
In the Preferred Share Issuance,
the Company engaged in intensive
discussion with the Corporation
on the various factors that
affect the value of shares,
such as the voting rights,
the terms and conditions of
dividends and the put option,
given the Company's business
circumstances and financial
condition.
Further, the Company retained
third party institutions (SMBC
Nikko Securities Inc., Mizuho
Securities, Co., Ltd. and Mitsubishi
UFJ Morgan Stanley Securities,
Co., Ltd.) to evaluate the
Preferred Shares based on the
terms and conditions of issuance
settled and agreed upon with
the Corporation, and the Company
received a share valuation
report which utilized commonly-used
pricing models. Although valuation
of preferred shares without
any objective market prices
is extremely sophisticated
and complicated, and there
are various views on this point,
given that the respective amounts
to be paid in for Class A preferred
shares and Class B preferred
shares are discounted for more
than 10% compared to the value
of shares calculated by each
third party institution, the
Company concluded that the
said amounts to be paid are
likely to be regarded as prices
"particularly favorable" to
the subscriber for the shares,
as stipulated in the Companies
Act. Therefore, the Company
plans to obtain approval concerning
the Preferred Share Issuance
through a super majority resolution
at the Ordinary General Meeting
of Shareholders scheduled for
June 27, 2012.
-------------------------- ----------------------------------------------
(2) Basis for concluding Because Class A preferred shares
that the number come with voting rights, when
of shares to be Class A preferred shares are
issued and the extent issued, there will be a 100.43%
of dilution are dilution to common shares on
reasonable a voting rights basis (compared
to the number of common shares
issued before the Preferred
Share Issuance (rounded to
the second decimal place);
hereinafter the same). Further,
Class A preferred shares come
with a put option, for which
the consideration is Class
B preferred shares or common
shares, and Class B preferred
shares come with a put option,
for which the consideration
is Class A preferred shares
or common shares. Even if the
Preferred Shares have not been
converted into common shares,
there will be a dilution of
313.83% on a voting rights
basis in case where all Class
B preferred shares have been
converted into Class A preferred
shares. Furthermore, if all
Class A preferred shares and
Class B preferred shares are
converted into common shares,
there will be dilution of up
to 2,092.20% (in case the put
options are exercised at the
minimum exercise price (the
minimum price of the exercise
price when converting the Preferred
Shares into common shares;
hereinafter the same) of 30
yen). However, exercising the
put option with the minimum
exercise price of 30 yen requires
a total number of authorized
shares of approximately 35
billion shares, while the total
number of authorized shares
following the increase to be
made upon the resolution at
the Company's Ordinary General
Meeting of Shareholders scheduled
for June 27 of this year (and
the Preferred Share Issuance
being effectuated) is only
14.1 billion shares; therefore,
in order to exercise the put
options in such a manner, the
total number of authorized
shares needs to be increased
by holding another general
meeting of shareholders. Incidentally,
assuming that the total number
of authorized shares is 14.1
billion shares, the dilution
rate would be 784.13%.
As discussed above, it is expected
that, in conjunction with the
Preferred Share Issuance, there
will be a significant dilution
of the existing shares, which
would impose great burden on
the shareholders of the Company;
nonetheless, the Company decided
that the Preferred Share Issuance
to the Corporation is the best
scheme because: (i) strengthening
the Company's financial basis
and securing funds through
the Preferred Share Issuance
are essential in order for
the Company to ensure its business
continuity and to achieve "compensation,
Decommissioning and stable
supply" simultaneously; (ii)
the planned total payment for
subscription to the preferred
shares to be issued amounts
to a huge amount of one trillion
yen, and given the urgency
of this matter, no party but
the Corporation could be the
subscriber; (iii) through possession
of shares by the Corporation,
which is organized with approval
from the government, positive
effects such as improvement
of the Company's credit can
be expected; and, (iv) the
Corporation is going to reduce
the voting rights held to under
one half of the total voting
rights (calculated on the basis
not including voting rights
relating to dilutive shares)
when it determines that the
completion of the Company's
intensive management reform
is foreseen with a certain
level of confidence, or that
the Company is autonomously
raising funds in the publicly
offered bonds market, by converting
a portion of Class A preferred
shares to Class B preferred
shares, or other measures.
Accordingly, the Company believes
that the dilution caused by
the Preferred Share Issuance
is reasonable.
Incidentally, a resolution
or decision for a third party
allotment with a dilution rate
that exceeds 300% would fall
under a situation where the
Tokyo Stock Exchange ("TSE")
may find that the rights of
shareholders and the exercise
of their rights would be restricted
unjustifiably, and such a dilution
will meet the criteria for
delisting, unless the TSE finds,
after comprehensively taking
into account the purpose of
such third party allotment,
the attributes of the allottee,
the status of the procedures
to change the total number
of authorized shares, and other
terms and conditions, that
the likelihood of infringing
the interests of shareholders
and investors is small (Article
601, Paragraph 13, Item (6)
of the Securities Listing Regulations
Enforcement Rules, and Section
IV9 of Guidelines Concerning
Listing Control etc. of the
TSE). However, because of the
reasons of (i) through (iv)
above, the Company believes
that the likelihood of infringing
the interests of shareholders
and investors is small for
the Preferred Share Issuance
and as such it does not meet
the delisting criteria.
-------------------------- ----------------------------------------------
5. Reasons for Selection of the Allottee, etc. (1) Class A
preferred shares and Class B preferred shares
(i) Overview of Nuclear Damage Compensation
the allottee Facilitation Corporation
For details on the overview
of the allottee, please refer
to Attachment IV-5-(1).
------------------------- ----------------------------------------
(ii) Reason for As set forth in "I. Purpose
selecting the allottee of the Preferred Share Issuance"
and "IV. The Preferred Share
Issuance by Third Party Allotment"
"2. Purpose and Reason for
the Offering."
------------------------- ----------------------------------------
(iii) Allotee's (a) As set forth in "I. Purpose
policies for holding of the Preferred Share Issuance"
shares and "IV. The Preferred Share
Issuance by Third Party Allotment"
"2. Purpose and Reason for
the Offering." Further, the
Company plans to obtain a confirmation
letter from the Corporation
agreeing that if, during the
two year period after the allotment
of the Class A preferred shares
and Class B preferred shares,
the Corporation assigns all
or a part of the Class A preferred
shares, the Class B preferred
shares, or the common shares
that were delivered in exchange
for the Class A preferred shares
or the Class B preferred shares,
the Corporation will immediately
notify the Company in writing
of the name and address of
the assignee, the number of
assigned shares and other details,
the Company will notify the
TSE of the contents of such
notice, and the contents of
such notice would be made available
for public inspection.
(b) In the Comprehensive Special
Business Plan and the Share
Subscription Agreement, and
other materials, the Company
and the Corporation have agreed
to and have announced the following
shareholding policy of the
Corporation:
(i) With respect to the exercise
of put options for the purpose
of securing the voting rights
(conversion of Class B preferred
shares into Class A preferred
shares or conversion of Class
A preferred shares and Class
B preferred shares into common
shares) that would be done
in the case there is a compelling
circumstance in light of the
status of implementation of
the compensation for damage,
etc.: if the Corporation needs
to (a) increase the ratio of
voting rights held by it to
two-thirds or more, or (b)
re-increase the ratio of voting
rights held that was once reduced
to less than one-half to one-half
or more, the Corporation will,
upon consultations with the
Company, carry out, jointly
with the Company, the procedures
to amend the approved Special
Business Plan as stipulated
in Article 46, Paragraph 1
of the Corporation Act, and
will exercise the put option
after obtaining approval of
the minister in charge regarding
such amendments (however, the
foregoing will not apply to
the Corporation's exercise
of put option where common
shares are obtained as consideration,
if the option is exercised
for the purpose of liquidating
the Preferred Shares held by
the Corporation through sales
of common shares in the market
or the like); and
(ii) With respect to the policy
of disposal, if the Corporation
determines that (i) the completion
of the Company's intensive
management reform is foreseen
with a certain level of confidence
or (ii) the Company is autonomously
raising funds in the publicly
offered bonds market, the Corporation
will convert a part of its
Class A preferred shares into
Class B preferred shares or
take other measures, thereby
reducing its ratio of voting
rights held in the Company
to under one half of all voting
rights (calculated on the basis
not including voting rights
relating to dilutive shares)
(the conclusion of the "Provisional
Government Supervision"). Further,
the Corporation plans to recover
the investment after the conclusion
of the Provisional Government
Supervision through the Company's
buyback of shares owned by
the Corporation or by sale
of common shares on stock markets
following conversion into common
shares, to an extent that will
not have an adverse impact
on the Company's managerial
reform and the stock market,
and at an appropriate timing,
taking into account the Company's
revenue and financial status,
trends in the stock market,
etc.
In addition to the above, the
Corporation does not plan to
implement any borrowing and
lending transaction of shares,
etc. or any over-the-counter
derivative transaction for
hedging purposes. Thus, the
Preferred Share falls within
the exemption under Article
434, Paragraph 2 of the Securities
Listing Regulations of the
TSE and the Company and the
Corporation have not taken
any measure to restrict the
conversion into common shares
by the Corporation.
------------------------- ----------------------------------------
(iv) Details of In order for the Corporation
confirmation concerning to secure the funds for providing
the existence of financial support, a government
property necessary guarantee of 4 trillion yen
for payment by the was recorded in the government
allottee budget for fiscal year 2012.
In fiscal year 2012, the Corporation
will procure from financial
institutions the funds necessary
to subscribe for the Preferred
Shares by utilizing such government
guarantees; thus, we determined
that it has the necessary property
for the payment.
------------------------- ----------------------------------------
6. Major Shareholders and Their Holding Ratios after the
Offering (1) Common shares
Before the Offering (March After the Offering
31, 2012)
----------------------------------- ----------------------------------
Tokyo Metropolitan Tokyo Metropolitan
Government 2.66% Government 2.66%
--------------------------- ------ -------------------------- ------
TEPCO Employees' TEPCO Employees'
Shareholding Association 2.39% Shareholding Association 2.39%
--------------------------- ------ -------------------------- ------
Sumitomo Mitsui Sumitomo Mitsui
Banking Corporation 2.24% Banking Corporation 2.24%
--------------------------- ------ -------------------------- ------
The Dai-ichi Life The Dai-ichi Life
Insurance Company, Insurance Company,
Limited 2.22% Limited 2.22%
--------------------------- ------ -------------------------- ------
Nippon Life Insurance Nippon Life Insurance
Company 2.19% Company 2.19%
--------------------------- ------ -------------------------- ------
The Master Trust The Master Trust
Bank of Japan, Bank of Japan,
Ltd. (Trust Account) 1.85% Ltd. (Trust Account) 1.85%
--------------------------- ------ -------------------------- ------
Japan Trustee Services Japan Trustee Services
Bank, Ltd. (Trust Bank, Ltd. (Trust
Account) 1.73% Account) 1.73%
--------------------------- ------ -------------------------- ------
Mizuho Corporate Mizuho Corporate
Bank, Ltd. 1.48% Bank, Ltd. 1.48%
--------------------------- ------ -------------------------- ------
SSBT OD05 OMNIBUS SSBT OD05 OMNIBUS
ACCOUNT-TREATY ACCOUNT-TREATY
CLIENTS 1.12% CLIENTS 1.12%
--------------------------- ------ -------------------------- ------
State Street Bank State Street Bank
West Client Treaty 0.78% West Client Treaty 0.78%
--------------------------- ------ -------------------------- ------
(2) Class A preferred shares
Before the Offering After the Offering
--------------------- --------------------------------------
Nuclear Damage
Compensation Facilitation
Not applicable Corporation 100.00%
--------------------- ---------------------------- --------
(3) Class B preferred shares
Before the Offering After the Offering
--------------------- --------------------------------------
Nuclear Damage
Compensation Facilitation
Not applicable Corporation 100.00%
--------------------- ---------------------------- --------
(4) State of voting rights in the case Class B preferred shares
are converted into Class A preferred shares, or all of the
Preferred Shares are converted into common shares, after the
Preferred Share Issuance (forecast)
Before the Offering After If all If all Class
(March 31, 2012) the Class A and Class
Offering B preferred B preferred
shares shares are
are converted converted into
into Class common shares
A preferred
shares
------------------------------------ ---------- --------------- -----------------------------
On the On the
basis basis
of the of maximum
total dilution
number (3)
of authorized
shares
-14.1
billion
(2)
---------------------------- ------ ---------- --------------- --------------- ------------
Nuclear Damage
Compensation Facilitation
Corporation 50.11% 75.84% 88.69% 95.44%
Tokyo Metropolitan
Government 2.68% 1.34% 0.65% 0.30% 0.12%
TEPCO Employees'
Shareholding Association 2.41% 1.20% 0.58% 0.27% 0.11%
Sumitomo Mitsui
Banking Corporation 2.26% 1.13% 0.54% 0.26% 0.10%
The Dai-ichi Life
Insurance Company,
Limited 2.23% 1.11% 0.54% 0.25% 0.10%
Nippon Life Insurance
Company 2.21% 1.10% 0.53% 0.25% 0.10%
The Master Trust
Bank of Japan,
Ltd. (Trust Account) 1.87% 0.93% 0.45% 0.21% 0.09%
Japan Trustee Services
Bank, Ltd. (Trust
Account) 1.74% 0.87% 0.42% 0.20% 0.08%
Mizuho Corporate
Bank, Ltd. 1.49% 0.75% 0.36% 0.17% 0.07%
SSBT OD05 OMNIBUS
ACCOUNT-TREATY
CLIENTS 1.13% 0.56% 0.27% 0.13% 0.05%
State Street Bank
West Client Treaty 0.78% 0.39% 0.19% 0.09% 0.04%
---------------------------- ------ ---------- --------------- --------------- ------------
Notes (1) Based on the shareholder registry (kabunushi meibo) as of March 31, 2012
(2) The total number of authorized shares of the Company would
be 14.1 billion shares assuming that the Ordinary General Meeting
of Shareholders scheduled for June 27 of this year approves all of
the agenda items to be submitted by the Company and that all of the
Preferred Shares are issued; thus, the total number of common
shares issued by the Company cannot be more than 14.1 billion
shares (unless the total number of authorized shares is increased
by a separate amendment to the Articles of Incorporation).
Therefore, the calculation here is made on the assumption that in
case the Corporation, shareholder of the Preferred Shares, converts
all Preferred Shares into common shares, the number of shares held
by the Corporation is 12,492,982,000 shares (i.e., 14,100,000,000
minus 1,607,017,000 (i.e., number of common shares issued as of
March 31, 2012) ).
(3) The calculation is made on the assumption that all Preferred
Shares are converted into common shares with the minimum exercise
price of 30 yen, and the common shares are diluted to the
theoretical maximum extent, with the result that the Corporation,
shareholder of the Preferred Shares, holds 33,333,333,000 shares.
In such case, the total number of authorized shares needs to be
increased through a separate amendment to the Articles of
Incorporation.
7. Prospects Going Forward
With respect to the impact of the Preferred Share Issuance on
the Company's performance, a review of performance and other
factors is underway, and in the event that the Company judges that
the business forecasts requires revision, we will provide prompt
notice to that effect.
8. Procedures to be Taken under the Corporate Code of
Conduct
Because the Preferred Share Issuance will cause dilution in a
rate of 25% or more and a change in the Company's controlling
shareholder, in accordance with Article 432, Item (2) of the
Securities Listing Regulations of the TSE, in order to confirm the
intent of shareholders, we will ask for our shareholders' decision
regarding the necessity and appropriateness of the Preferred Share
Issuance by third party allotment, through a super majority
resolution at the Company's Ordinary General Meeting of
Shareholders scheduled for June 27, 2012.
The Corporation plans to recover the full amount of its
investment after conclusion of the Provisional Government
Supervision, through the Company's buyback of shares owned by the
Corporation or by sale of common shares on stock markets following
conversion into common shares, to an extent that will not have an
adverse impact on the Company's managerial reform and the stock
market, and at an appropriate timing, taking into account the
Company's revenue and financial status, trends in the stock market,
etc. Further, the Corporation does not plan to implement any
borrowing and lending transaction of shares, etc. or any
over-the-counter derivative transaction for hedging purposes. Thus,
the Preferred Share falls within the exemption under Article 434,
Paragraph 2 of the Securities Listing Regulations of the TSE and
the Company and the Corporation have not taken any measure to
restrict the conversion into common shares by the Corporation.
9. Business Results and Equity Financing for the Past Three
Years
(1) Business Results for the Past Three Years (Consolidated)
(Unit: million yen)
Fiscal year Fiscal year Fiscal year
ended March ended March ended March
2010 2011 2012
-------------------- ------------- ------------- -------------
Operating Revenues 5,016,257 5,368,536 5,349,445
-------------------- ------------- ------------- -------------
Operating Income 284,443 399,624 (272,513)
-------------------- ------------- ------------- -------------
Ordinary Income 204,340 317,696 (400,405)
-------------------- ------------- ------------- -------------
Net income 133,775 (1,247,348) (781,641)
-------------------- ------------- ------------- -------------
Earnings per
share (yen) 99.18 (846.64) (487.76)
-------------------- ------------- ------------- -------------
Dividend per
share (yen) 60.00 30.00 0.00
-------------------- ------------- ------------- -------------
Net assets per
share (yen) 1,828.08 972.28 491.22
-------------------- ------------- ------------- -------------
(2) Current Status of the Number of Issued Shares and the Number
of Dilutive Shares (as of March 31, 2012)
Class Number of shares Percentage of
issued shares
------------------ ------------------- ---------------
Number of issued 1,607,017,531
shares shares 100%
------------------ ------------------- ---------------
(Note) As of March 31, 2012, there is no dilutive share issued
by the Company.
(3) Current Status of Share Price
(i) Status over the Past Three Years
Fiscal year Fiscal year Fiscal year
ended March ended March ended March
2010 2011 2012
-------------- ------------- ------------- -------------
Highest price 2,540 yen 2,499 yen 643 yen
-------------- ------------- ------------- -------------
Lowest price 2,085 yen 461 yen 148 yen
-------------- ------------- ------------- -------------
(ii) Status Over the Past Six Months
November December January February March April
2011 2012
-------- --------- --------- -------- --------- -------- --------
Highest 323 yen 290 yen 233 yen 262 yen 250 yen 221 yen
price
-------- --------- --------- -------- --------- -------- --------
Lowest 264 yen 175 yen 153 yen 192 yen 207 yen 195 yen
price
-------- --------- --------- -------- --------- -------- --------
(4) Status of Equity Finance over the Last Three Years
Issuance of new shares by public offering (common shares)
Issuance Date October 19, 2010
----------------------- ------------------------------------------
Amount of procured 400,275,210,000 yen (approximate
fund net proceeds)
----------------------- ------------------------------------------
Issue price 1,767 yen
----------------------- ------------------------------------------
Number of issued 1,352,867,531 shares (including
shares at the treasury stock)
time of offering
----------------------- ------------------------------------------
Number of shares 227,630,000 shares
issued by the
offering
----------------------- ------------------------------------------
Total number 1,580,497,531 shares
of issued shares
after the offering
----------------------- ------------------------------------------
Initial use Capital investment funds directed
of funds at at lowering carbon emissions including
the time of streamlining of efficiency of power
issuance sources and investment and loan
funds for the purpose of expanding
high-growth businesses.
----------------------- ------------------------------------------
Timing of expenditures End of March 2014
as scheduled
as of the time
of issuance
----------------------- ------------------------------------------
Current appropriation In the wake of the March 11, 2011
status Tohoku-Chihou-Taiheiyou-Oki Earthquake,
a fundamental review of the business
operations became inevitable; therefore,
a review was carried out on the
investment plan, including investments
for lowering carbon emissions and
investments in high-growth businesses,
the initially intended uses of
the funds. As a result, the balance
of procured funds from the capital
increase is being appropriated
for equipment funds necessary to
carry out the electricity supply
business for the time being.
----------------------- ------------------------------------------
Issuance of new shares by third party allotment (third party
allotment in conjunction with secondary offering by way of
over-allotment)
Issuance Date November 1, 2010
----------------------- ------------------------------------------
Amount of procured 46,633,840,000 yen (approximate
fund net proceeds)
----------------------- ------------------------------------------
Issue price 1,767 yen
----------------------- ------------------------------------------
Number of issued 1,580,497,531 shares (including
shares at the treasury stock)
time of offering
----------------------- ------------------------------------------
Number of shares 26,520,000 shares
issued by the
offering
----------------------- ------------------------------------------
Total number 1,607,017,531 shares
of issued shares
after the offering
----------------------- ------------------------------------------
Allottee Nomura Securities Co., Ltd.
----------------------- ------------------------------------------
Initial use Capital investment funds directed
of funds at at lowering carbon emissions including
the time of streamlining of efficiency of power
issuance sources and investment and loan
funds for the purpose of expanding
high-growth businesses.
----------------------- ------------------------------------------
Timing of expenditures End of March 2014
as scheduled
as of the time
of issuance
----------------------- ------------------------------------------
Current appropriation In the wake of the March 11, 2011
status Tohoku-Chihou-Taiheiyou-Oki Earthquake,
a fundamental review of the business
operations became inevitable; therefore,
a review was carried out on the
investment plan, including investments
for lowering carbon emissions and
investments in high-growth businesses,
the initially intended uses of
the funds. As a result, the balance
of procured funds from the capital
increase is being appropriated
for equipment funds necessary to
carry out the electricity supply
business for the time being.
----------------------- ------------------------------------------
10 Details of issue
Please refer to Attachments IV-1-(1) and IV-1-(2).
[TRANSLATION]
Attachment IV-1-(1)
Terms and Conditions of Issuance of Class A Preferred Shares
1. Name of Shares
Tokyo Electric Power Company, Incorporated Class A Preferred
Shares (the "Class A Preferred Shares")
2. Number of Shares Offered for Subscription
1,600,000,000shares
3. Amount to be Paid in for Shares Offered for Subscription
200 yen per share
4. Total Amount to be Paid in
320,000,000,000 yen
5. Stated Capital and Capital Reserve to be Increased
Stated Capital 160,000,000,000 yen (100 yen per share)
Capital reserve 160,000,000,000 yen (100 yen per share)
6. Payment Period
From July 11, 2012 to July 25, 2012
7. Method of Offering
1,600,000,000 Class A Preferred Shares will be allotted to the
Subscribers by way of a third-party allotment.
8. Distribution of Surplus
(1) Class A Preferred Year-End Dividends
If the Company is to pay year-end dividends, it shall pay to
shareholders who hold the Class A Preferred Shares ("Class A
Preferred Shareholders") or registered Class A Preferred Share
pledgees ("Registered Class A Preferred Share Pledgees") entered or
recorded in the Register of Shareholders as of the end of the
record date pertaining to such year-end dividends, in preference to
shareholders who hold Common Shares ("Common Shareholders") or
registered Common Share pledgees ("Registered Common Share
Pledgees"), year-end dividends of surplus for each Class A
Preferred Share in an amount calculated by multiplying the amount
paid in per Class A Preferred Share (200 yen; provided that if the
Class A Preferred Shares have been subject to a share split, gratis
allotment of shares, share consolidation, or any other similar
event, such amount will be appropriately adjusted) by the annual
dividend rate provided for in Item (2) below (calculated to the
three decimal places denominated in yen and rounded to the two
decimal places) ("Class A Preferred Annual Dividend Rate") (the
amount so calculated will be referred to as the "Class A Preferred
Dividend Base Amount"). However, that if the Class A Preferred
Interim Dividends provided for in Item (3) below have been paid to
Class A Preferred Shareholders or Registered Class A Preferred
Share Pledgees in the business year which includes such record
date, the amount so paid shall be deducted accordingly from the
amount of such year-end dividends.
(2) Class A Preferred Dividend Annual Rate
Class A Preferred Dividend Annual Rate = Twelve (12)-month
Japanese Yen TIBOR + 0.25%
The Class A Preferred Dividend Annual Rate shall be calculated
on a percentage basis to the four decimal places and rounded to the
three decimal places. In the formula provided above, the "Twelve
(12)-month Japanese Yen TIBOR" shall be the rate published by the
Japanese Bankers Association as the Twelve (12)-month Japanese Yen
Tokyo Inter Bank Offered Rate (Japanese Yen TIBOR) as of 11:00 a.m.
on the first day of each business year (or, if such day is a bank
holiday, then the immediately preceding bank business day) (the
"Class A Preferred Dividend Annual Rate Determination Date"), or
any rate which is considered to be equivalent thereto. In the case
where Twelve (12)-month Japanese Yen TIBOR is not published on such
day and time, the rate published by the British Bankers'
Association (BBA) as the London Inter Bank Offered Rate (Twelve
(12)-month Euro Yen LIBOR (quoted on a 360 day basis)) appearing on
Reuters page 3750 as of 11:00 a.m., London Time, on the Class A
Preferred Dividend Annual Rate Determination Date (or, if such day
is a bank holiday in London, then the immediately preceding bank
business day in London), or any rate which is considered to be
equivalent thereto, shall be used in place of the Twelve (12)-month
Japanese Yen TIBOR.
(3) Class A Preferred Interim Dividends
If the Company is to pay interim dividends, it shall pay to
Class A Preferred Shareholders or Registered Class A Preferred
Share Pledgees entered or recorded in the Register of Shareholders
as of the end of the record date pertaining to such interim
dividends, in preference to Common Shareholders or Registered
Common Share Pledgees, interim dividends of surplus for each Class
A Preferred Share in an amount determined by a resolution adopted
at a meeting of the Board of Directors (the "Class A Preferred
Interim Dividends") up to one-half of the Class A Preferred
Dividend Base Amount.
(4) Non-cumulative Clause
If the amount of distribution of surplus per Class A Preferred
Share paid to a Class A Preferred Shareholder or Registered Class A
Preferred Share Pledgee in any particular business year does not
reach the Class A Preferred Dividend Base Amount, the shortfall
amount per Class A Preferred Share shall not accumulate and carry
over to subsequent business years.
(5) Non-participation Clause
No distribution of surplus in excess of the Class A Preferred
Dividend Base Amount shall be paid to Class A Preferred
Shareholders or Registered Class A Preferred Share Pledgees, except
for (i) distribution of surplus provided for in Article 758, Item
8(b) of the Companies Act or Article 760, Item 7(b) thereof, which
may be paid in the process of an absorption-type company split by
the Company, or (ii) distribution of surplus provided for in
Article 763, Item 12(b) thereof or Article 765, Paragraph 1, Item
8(b) thereof, which may be paid in the process of an
incorporation-type company split by the Company.
(6) Order of Priority
The Class A Preferred Shares and the Class B Preferred Shares
shall have the same order of priority in respect of payment of
distribution of surplus.
9. Distribution of Residual Assets
(1) Class A Preferred Distribution Amount of Residual Assets
If the Company is to distribute residual assets, it shall pay to
Class A Preferred Shareholders or Registered Class A Preferred
Share Pledgees, in preference to Common Shareholders or Registered
Common Share Pledgees, an amount for each Class A Preferred Share
equal to the amount paid in per Class A Preferred Share (provided
that if the Class A Preferred Shares have been subject to a share
split, gratis allotment of shares, share consolidation, or any
other similar event, such amount will be appropriately adjusted)
plus the Amount Equal to Accrued Class A Preferred Dividends
provided for in Item (3) below.
(2) Non-participation Clause
No distribution of residual assets shall be made to Class A
Preferred Shareholders or Registered Class A Preferred Share
Pledgees, except as provided for in Item (1) above.
(3) Amount Equal to Accrued Class A Preferred Dividends
The Amount Equal to Accrued Class A Preferred Dividends shall
mean, as of the day on which residual assets are distributed (the
"Distribution Date"), the amount calculated by multiplying the
number of days in the period from the first day (inclusive) of the
business year which includes the Distribution Date to the
Distribution Date (inclusive) by the Class A Preferred Dividend
Base Amount, and then dividing that product by 365 (calculated to
the three decimal places denominated in yen and rounded up to the
two decimal places). However, that if the Class A Preferred Interim
Dividends have been paid to Class A Preferred Shareholders or
Registered Class A Preferred Share Pledgees in the business year
which includes the Distribution Date, the amount so paid shall be
deducted accordingly from the amount of such Amount Equal to
Accrued Class A Preferred Dividends.
(4) Order of Priority
The Class A Preferred Shares and the Class B Preferred Shares
shall have the same order of priority in respect of distribution of
residual assets.
10. Voting Rights
Class A Preferred Shareholders shall have voting rights at
General Meeting of Shareholders. One hundred (100) shares shall
constitute one unit of the Class A Preferred Shares.
11. Put Option with Common Shares as Consideration
(1) Put Option with Common Shares as Consideration
Each Class A Preferred Shareholder is entitled to request the
Company, at any time on or after the day on which an amount to be
paid in for the Class A Preferred Shares was paid, to acquire all
or part of the Class A Preferred Shares held by such Class A
Preferred Shareholder in accordance with laws and regulations (the
"Put Option with Common Shares as Consideration") in exchange for
the delivery of Common Shares in such number as provided for in
Item (2) below (the "Common Shares Subject to Put Option"), and the
Company shall deliver the Common Shares Subject to Put Option to
such Class A Preferred Shareholder to the extent permitted under
laws and regulations in exchange for acquiring the Class A
Preferred Shares subject to such Put Option with Common Shares as
Consideration.
However, if, as of the day on which the Put Option with Common
Shares as Consideration is exercised by a Class A Preferred
Shareholder pursuant to this paragraph (the "Put Option Date with
Common Shares as Consideration"), the Number of Residual Authorized
Shares (as defined below; here and hereinafter the same) is less
than the Aggregate Number of Common Shares Subject to Put Option
(as defined below; here and hereinafter the same), the Put Option
with Common Shares as Consideration shall become effective only
with respect to the Class A Preferred Shares in a number
(calculated to the one decimal place and rounded down to the
nearest whole number; if less than zero (0), then such number shall
be zero (0)) obtained by multiplying (i) the number of the Class A
Preferred Shares subject to the Put Option with Common Shares as
Consideration exercised by each Class A Preferred Shareholder by
(ii) the number obtained by dividing the Number of Residual
Authorized Shares by the Aggregate Number of Common Shares Subject
to Put Option, and no Put Option with Common Shares as
Consideration shall be deemed to have been exercised with respect
to the Class A Preferred Shares subject to the Put Option with
Common Shares as Consideration other than those Class A Preferred
Shares with respect to which the Put Option with Common Shares as
Consideration becomes effective. Upon
such partial acquisition, the Class A Preferred Shares to be so
acquired shall be determined by a lottery, a pro rata allotment in
proportion to the number of the Class A Preferred Shares subject to
the Put Option with Common Shares as Consideration, or any other
reasonable method determined by the Board of Directors of the
Company.
The "Number of the Residual Authorized Shares" shall mean the
number that represents the difference between (I) the total number
of shares to be issued of the Company as of the Put Option Date
with Common Shares as Consideration and (II) the sum of (i) the
number of issued shares (excluding treasury stock (limited to the
Common Shares)) as of such Put Option Date with Common Shares as
Consideration and (ii) the number of shares that the holders of new
share subscription rights (excluding those which the first day of
the period provided for in Article 236, Paragraph 1, Item 4 of the
Companies Act has not arrived) as of such Put Option Date with
Common Shares as Consideration acquire pursuant to the provisions
of Article 282 of the Companies Act.
The "Aggregate Number of Common Shares Subject to Put Option"
shall mean the number (calculated to the one decimal place and
rounded up to the nearest whole number) obtained by dividing by the
relevant exercise price as provided for in Items (3) through (5)
below as of such Put Option Date with Common Shares as
Consideration the amount obtained by multiplying the number of the
Class A Preferred Shares with respect to which a Class A Preferred
Shareholder exercises the Put Option with Common Shares as
Consideration on such Put Option Date with Common Shares as
Consideration by the amount to be paid in per Class A Preferred
Share (provided that if the Class A Preferred Shares have been
subject to a share split, gratis allotment of shares, share
consolidation, or any other similar event, such amount will be
appropriately adjusted).
(2) Number of Common Shares to be Delivered in Exchange for
Acquisition of Class A Preferred Shares
The number of Common Shares to be delivered in exchange for
acquisition of Class A Preferred Shares shall be the number
obtained by dividing by the exercise price provided for in Items
(3) through (5) below the amount obtained by multiplying the number
of the Class A Preferred Shares subject to the Put Option with
Common Shares as Consideration by the amount to be paid in per
Class A Preferred Share (provided that, if the Class A Preferred
Shares have been subject to a share split, gratis allotment of
shares, share consolidation, or any other similar event, such
amount will be appropriately adjusted). Any fraction of a share
that arises in the total number of Common Shares to be delivered in
exchange for the acquisition of Class A Preferred Shares subject to
the Put Option with Common Shares as Consideration shall be
discarded, and in such case, the payment of money shall be made
pursuant to Article 167, Paragraph 3 of the Companies Act.
(3) Initial Exercise Price
The initial exercise price shall be 200 yen.
(4) Revision of the Exercise Price
On or after the day immediately after the day on which an amount
to be paid in for Class A Preferred Shares was paid, the exercise
price shall be revised to an amount (calculated to the two decimal
places denominated in yen and rounded to the one decimal place)
equal to ninety (90) % of the Market Price as of the Put Option
Date with Common Shares as Consideration (as defined below)
(hereinafter the exercise price after such revision shall be
referred to as the "Revised Exercise Price"). However, if the
Revised Exercise Price exceeds 300 yen (the "Maximum Exercise
Price"), then the Revised Exercise Price shall be the Maximum
Exercise Price, and if the Revised Exercise Price falls below 30
yen (the "Minimum Exercise Price"), then the Revised Exercise Price
shall be the Minimum Exercise Price. Each of the Maximum Exercise
Price and the Minimum Exercise Price shall be subject to adjustment
provided for in Item (5) below.
"Market Price as of the Put Option Date with Common Shares as
Consideration" shall mean the average of the daily closing price
(including the value of quotation) of Common Shares of the Company
in regular trading on the Tokyo Stock Exchange, Inc. for the five
(5) consecutive trading days (excluding any day on which there was
no closing price, and the average shall be calculated to the two
decimal places denominated in yen and rounded to the one decimal
place) immediately prior to each Put Option Date with Common Shares
as Consideration (the "Exercise Price Calculation Period").
However, if the Class A Preferred Shareholder and the Company
execute a primary underwriting agreement under the Financial
Instruments and Exchange Act with a financial instruments firm or
registered financial institution for the purpose of a secondary
offering of the Common Shares Subject to Put Option (including the
Class A Preferred Shareholder and the Company execute an agreement
similar to such primary underwriting agreement with a foreign
securities brokers for the purpose of a secondary offering of the
Common Shares Subject to Put Option outside Japan), when a Class A
Preferred Shareholder will exercise the Put Option with Common
Shares as Consideration from the day immediately after the day on
which the Company released that such primary underwriting agreement
was executed to the day immediately before the delivery date of
such secondary offering, the Exercise Price Calculation Period
shall be twenty (20) consecutive trading days commencing on the
120th trading day prior to the day on which the Company released
that the decision relating to such secondary offering is made. If,
during the Exercise Price Calculation Period, any of the events
provided for in Item (5) below occurs, the average of the daily
closing price (including the value of quotation) referred to above
shall be revised to a price that the Company deems appropriate in a
manner similar to that provided for in Item (5) below.
(5) Adjustment of the Exercise Price, the Maximum Exercise Price and the Minimum Exercise Price
(a) If any of the events provided for below occurs, the exercise
price, the Maximum Exercise Price and the Minimum Exercise Price
shall be adjusted as follows (however, the exercise price shall be
adjusted pursuant to this Item (5) only where any of the events
provided for below occurs during the period from when the closing
price (including the value of quotation) of Common Shares of the
Company in regular trading is fixed on the last day of the Exercise
Price Calculation Period to when the Put Option with Common Shares
as Consideration is exercised.):
(i) If the Common Shares are subject to a share split or gratis
allotment of shares, the exercise price shall be adjusted in
accordance with the following formula. In the case of a gratis
allotment of shares, the "number of issued Common Shares before
split" and the "number of issued Common Shares after split" in the
following formula shall be deemed to be replaced with the "number
of issued Common Shares before gratis allotment (excluding,
however, any Common Shares held by the Company at that time)" and
the "number of issued Common Shares after gratis allotment
(excluding, however, any Common Shares held by the Company at that
time)", respectively.
Exercise = Exercise x number of issued Common
price price Shares before split
after before
adjustment adjustment
number of issued Common
Shares after split
The exercise price after adjustment shall apply starting on the
day immediately after the record date for the share split, or the
effective date of the gratis allotment of shares (or, if a record
date for the gratis allotment of shares has been set, such record
date).
(ii) If the Common Shares of the Company are subject to a share
consolidation, the exercise price will be adjusted in accordance
with the following formula from the effective date of the share
consolidation.
Exercise = Exercise x number of issued Common
price price Shares before consolidation
after before
adjustment adjustment
number of issued Common
Shares after consolidation
(iii) If the Company issues Common Shares or disposes of Common
Shares held by the Company at an amount to be paid in that falls
below the market price per Common Share provided for in Item (d)
below (excluding in the case of a gratis allotment of shares, the
case of an acquisition of shares or new share subscription rights
(which includes new share subscription rights attached to bonds
with new share subscription rights; the same applies below in this
Item (5)) to be acquired in exchange for the delivery of Common
Shares, the case of exercise of new share subscription rights the
underlying shares of which are Common Shares, or the case of a
delivery of Common Shares because of a merger, share exchange or
corporate split), the exercise price shall be adjusted in
accordance with the formula provided for below (the "Exercise Price
Adjustment Formula"). The exercise price after adjustment shall
apply starting on the day immediately after the payment date (or,
if a payment period has been provided for, the last day of such
payment period), or, if a record date for an allotment to
shareholders has been provided for, starting on the day immediately
after such record date (the "Shareholder Allotment Date"). In the
case that the Company disposes of Common Shares held by it, the
"number of Common Shares to be newly issued" and "number of Common
Shares held by the Company" in the following formula shall be
deemed to be replaced with "number of Common Shares held by the
Company to be disposed of" and "number of Common Shares held by the
Company immediately before the disposal", respectively.
Exercise = Exercise x (number of + number of
price price issued Common Common Shares
after before Shares - number to be newly
adjustment adjustment of Common issued x
Shares held amount to
by the Company) be paid
in per share
----------------- ---------------
market price
per Common
Share
----------------- ---------------
(number of issued Common
Shares - number of shares
held by the Company)
+ number of Common Shares
to be newly issued
(iv) If the Company issues or disposes of any shares (including
by way of a gratis allotment of shares) that entitle their holder
to, by causing the Company to acquire or by being acquired by the
Company, receive Common Shares at an exercise price per Common
Share which falls below the market price per Common Share provided
for in Item (d) below, all the shares issued or disposed of shall
be deemed to have been acquired on the initial terms and conditions
and Common Shares shall be deemed to have been delivered on the
payment date for such shares (or, if a payment period has been
provided for, the last day of such payment period; here and
hereinafter the same in this Item (iv)), or in the case of a gratis
allotment of shares, on the effective date thereof (or, if a record
date for the gratis allotment of shares has been provided for, such
record date; here and hereinafter the same in this Item (iv)), or
if there is a Shareholder Allotment Date, on such date, and the
amount as the "amount to be paid in per share" in the Exercise
Price Adjustment Formula calculated by using such amount shall be
the exercise price after adjustment. The exercise price after
adjustment shall apply starting on the day immediately after the
payment date, in the case of a gratis allotment of shares, on the
day immediately after the effective date thereof, or if there is a
Shareholder Allotment Date, on the day immediately after such
date.
(v) If the Company issues new share subscription rights
(including by way of a gratis allotment of new share subscription
rights) that entitle their holder to, by being exercised or by
being acquired by the Company, receive Common Shares at a price of
the sum of the amount to be paid in for the new share subscription
rights per Common Share and the assets to be contributed on
exercise of the new share subscription rights which falls below the
market price per Common Share provided for in Item (d) below, all
the new share subscription rights issued shall be deemed to have
been exercised or acquired on the initial terms and conditions and
Common Shares shall be deemed to have been delivered on the
allotment date for the new share subscription rights in the case of
a gratis allotment of new share subscription rights, on the
effective date thereof (or, if a record date for the gratis
allotment of new share subscription rights has been provided for,
such record date; here and hereinafter the same in this Item (v))
or if there is a Shareholder Allotment Date, on such date, and the
amount as the "amount to be paid in per share" in the Exercise
Price Adjustment Formula calculated by using the sum of the amount
to be paid in for the new share subscription rights per Common
Share and the amount per Common Share of the assets to be
contributed on exercise of the new share subscription rights shall
be the Exercise Price after adjustment. The exercise price after
adjustment shall apply starting on the day immediately after the
date of allotment for such new share subscription rights, in the
case of a gratis allotment of new share subscription rights, on the
day immediately after the effective date thereof, or if there is a
Shareholder Allotment Date, on the day immediately after such
date.
(b) In addition to the events provided for in Item (a) above, if
any of the events in Item (i) through (iii) below occurs, the
Company shall appropriately adjust the exercise price upon giving
prior written notice to Class A Preferred Shareholders and
Registered Class A Preferred Share Pledgees to that effect and of
the reasons for the event, the exercise price after adjustment, the
day on which such adjustment applies and any other necessary
maters:
(i) Adjustment to the exercise price becomes necessary because
of a merger, share exchange, acquisition of all issued shares of
another company by way of a share exchange, share transfer,
absorption-type company split, succession to all or part of the
rights and obligations held by another company in relation to such
company's business by way of an absorption-type company split, or
incorporation-type company split;
(ii) Two or more events necessitating an adjustment to the
exercise price occur in proximity to each other, and it becomes
necessary to consider the effect of one of the events on the market
price that ought to be used in calculating the exercise price after
adjustment because of the other event(s); or
(iii) It otherwise becomes necessary to adjust the exercise
price because of the occurrence of an event which changes or has
the possibility of changing the number of issued Common Shares
(excluding, however, the number of Common Shares held by the
Company).
(c) If a calculation becomes necessary in adjusting the exercise
price, the calculation shall be made to the two decimal places and
rounded to the one decimal place.
(d) The market price per Common Share to be used in the Exercise
Price Adjustment Formula shall be the average daily closing price
(including the value of quotation) of the Common Shares of the
Company in regular trading on the Tokyo Stock Exchange, Inc. for
the thirty (30) consecutive trading days (excluding any day on
which there was no closing price, and the average shall be
calculated to the two decimal place denominated in yen and rounded
to the one decimal place) commencing on the 45th trading day prior
to the day on which the exercise price after adjustment is
applied.
(e) If, as a result of a calculation made in adjusting the
exercise price, the difference between the exercise price after
adjustment and the exercise price before adjustment is less than
one (1) yen, no adjustment to the exercise price will be made.
(6) Reasonable Measures
The exercise price provided for in Item (iii) through (v) above
shall be construed in terms of the prevention of dilution and the
substantive fairness between holders of shares of different
classes. If the calculation of the exercise price becomes difficult
or the result of calculation becomes unreasonable, the Company's
Board of Directors shall take the appropriate adjustment of the
exercise price and other reasonably necessary measures.
(7) Place at Which Put Options are Accepted
Mitsubishi UFJ Trust and Banking Corporation, Securities Agent
Division
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
(8) Each Class A Preferred Shareholder who wishes to exercise an
put option shall fill out the Company's prescribed put option
request form with necessary information, including the number of
the Class A Preferred Shares subject to such put option, and submit
such form to the place at which put options are accepted provided
for in Item (7) above.
(9) A put option takes effect when the put option request form
reaches the place at which put options are accepted provided for in
Item (7) above, and the Company will acquire the Class A Preferred
Shares and the Class A Preferred Shareholder who has exercised the
put option will become a holder of Common Shares which the Company
will be required to deliver in exchange for such Class A Preferred
Shares.
(10) After the acquisition has taken effect, the Company shall
deliver Common Shares to the Class A Preferred Shareholder who has
exercised the put option by recording an increase in book-entry
shares in the shares-held column in the register of book-entry
account of Japan Securities Depository Center, Incorporated or an
account management institution as designated by such Class A
Preferred Shareholder.
12. Put Option with the Class B Preferred Shares as Consideration
(1) Put Option with the Class B Preferred Shares as Consideration
Each Class A Preferred Shareholder is entitled to request the
Company at any time on or after day on which an amount to be paid
in for the Class A Preferred Share was paid (the "Put Option with
Class B Preferred Shares as Consideration") to acquire all or part
of the Class A Preferred Shares held by such Class A Preferred
Shareholder in accordance with laws and regulations in exchange for
the delivery of the Class B Preferred Shares in such number as
provided for in Item (2) below (the "Class B Preferred Shares
Subject to Put Option"), and the Company shall deliver the Class B
Preferred Shares Subject to Put Option to such Class A Preferred
Shareholder to the extent permitted under laws and regulations in
exchange for acquiring the Class A Preferred Shares subject to such
Put Option with Class B Preferred Shares as Consideration.
(2) Number of the Class B Preferred Shares to be Delivered in
Exchange for Acquisition of the Class A Preferred Shares
The number of the Class B Preferred Shares to be delivered in
exchange for acquisition of the Class A Preferred Shares shall be
the number obtained by multiplying the number of the Class A
Preferred Shares subject to the Put Option with Class B Preferred
Shares as Consideration by 0.1. Any fraction of a share that arises
in the total number of the Class B Preferred Shares to be delivered
in exchange for the acquisition of the Class A Preferred Shares
subject to the Put Option with Class B Preferred Shares as
Consideration shall be discarded, and in such case, the payment of
money shall be made pursuant to Article 167, Paragraph 3 of the
Companies Act.
(3) Place at Which Put Options are Accepted and Manner of Put Options etc.
The provisions of Paragraph 11, Items (7) through (9) shall
apply mutatis mutandis to the Put Option with Class B Preferred
Shares as Consideration.
13. Share Consolidation or Split, Allotment of Shares Offered
for Subscription, and Other Matters etc.
(i) In the case of share consolidation or split, the Company
will effectuate such share consolidation or split simultaneously
and in the same proportion with respect to the Common Shares, the
Class A Preferred Shares and the Class B Preferred Shares.
(ii) If the Company grants to its shareholders the right to
receive the allotment of shares offered for subscription or new
share subscription rights offered for subscription, the Company
will grant to Common Shareholders the right to receive the
allotment of Common Shares or new share subscription rights the
underlying shares of which are the Common Shares, as the case may
be, to Class A Preferred Shareholders the right to receive the
allotment of the Class A Preferred Shares or new share subscription
rights the underlying shares of which are the Class A Preferred
Shares, as the case may be, and to Class B Preferred Shareholders
the right to receive the allotment of Class B Preferred Shares or
new share subscription rights the underlying shares of which are
the Class B Preferred Shares, as the case may be, simultaneously
and in the same proportion.
(iii) If the Company makes a gratis allotment of shares or new
share subscription rights to its shareholders, the Company will
make a gratis allotment of the Common Shares or new share
subscription rights the underlying shares of which are the Common
Shares, as the case may be, to Common Shareholders, a gratis
allotment of the Class A Preferred Shares or new share subscription
rights the underlying shares of which are the Class A Preferred
Shares, as the case may be, to Class A Preferred Shareholders, and
a gratis allotment of the Class B Preferred Shares or new share
subscription rights the underlying shares of which are the Class B
Preferred Shares, as the case may be, to Class B Preferred
Shareholders, simultaneously and in the same proportion.
14. Changes in Laws and Regulations, etc.
If following a change or the like in laws or regulations it
becomes necessary to change the readings of terms in these Terms
and Conditions or take any other such measure, the Company's Board
of Directors shall take reasonably necessary measures.
[End]
[TRANSLATION]
Attachment IV-1-(2)
Terms and Conditions of Issuance of Class B Preferred Shares
1. Name of Shares
Tokyo Electric Power Company, Incorporated Class B Preferred
Shares (the "Class B Preferred Shares")
2. Number of Shares Offered for Subscription
340,000,000shares
3. Amount to be Paid in for Shares Offered for Subscription
2,000 yen per share
4. Total Amount to be Paid in
680,000,000,000 yen
5. Stated Capital and Capital Reserve to be Increased
Stated Capital 340,000,000,000 yen (1,000 yen per share)
Capital reserve 340,000,000,000 yen (1,000 yen per share)
6. Payment Period
From July 11, 2012 to July 25, 2012
7. Method of Offering
340,000,000 Class B Preferred Shares will be allotted to the
Subscribers by way of a third-party allotment.
8. Distribution of Surplus
(1) Class B Preferred Year-End Dividends
If the Company is to pay year-end dividends, it shall pay to
shareholders who hold the Class B Preferred Shares ("Class B
Preferred Shareholders") or registered Class B Preferred Share
pledgees ("Registered Class B Preferred Share Pledgees") entered or
recorded in the Register of Shareholders as of the end of the
record date pertaining to such year-end dividends, in preference to
shareholders who hold Common Shares ("Common Shareholders") or
registered Common Share pledgees ("Registered Common Share
Pledgees"), year-end dividends of surplus for each Class B
Preferred Share in an amount calculated by multiplying the amount
paid in per Class B Preferred Share (2,000 yen; provided that if
the Class B Preferred Shares have been subject to a share split,
gratis allotment of shares, share consolidation, or any other
similar event, such amount will be appropriately adjusted) by the
annual dividend rate provided for in Item (2) below (calculated to
the three decimal places denominated in yen and rounded to the two
decimal places) ("Class B Preferred Annual Dividend Rate") (the
amount so calculated will be referred to as the "Class B Preferred
Dividend Base Amount"). However, that if the Class B Preferred
Interim Dividends provided for in Item (3) below have been paid to
Class B Preferred Shareholders or Registered Class B Preferred
Share Pledgees in the business year which includes such record
date, the amount so paid shall be deducted accordingly from the
amount of such year-end dividends.
(2) Class B Preferred Dividend Annual Rate
Class B Preferred Dividend Annual Rate = Twelve (12)-month
Japanese Yen TIBOR + 0.5%
The Class B Preferred Dividend Annual Rate shall be calculated
on a percentage basis to the four decimal places and rounded to the
three decimal places. In the formula provided above, the "Twelve
(12)-month Japanese Yen TIBOR" shall be the rate published by the
Japanese Bankers Association as the Twelve (12)-month Japanese Yen
Tokyo Inter Bank Offered Rate (Japanese Yen TIBOR) as of 11:00 a.m.
on the first day of each business year (or, if such day is a bank
holiday, then the immediately preceding bank business day) (the
"Class B Preferred Dividend Annual Rate Determination Date"), or
any rate which is considered to be equivalent thereto. In the case
where Twelve (12)-month Japanese Yen TIBOR is not published on such
day and time, the rate published by the British Bankers'
Association (BBA) as the London Inter Bank Offered Rate (Twelve
(12)-month Euro Yen LIBOR (quoted on a 360 day basis)) appearing on
Reuters page 3750 as of 11:00 a.m., London Time, on the Class B
Preferred Dividend Annual Rate Determination Date (or, if such day
is a bank holiday in London, then the immediately preceding bank
business day in London), or any rate which is considered to be
equivalent thereto, shall be used in place of the Twelve (12)-month
Japanese Yen TIBOR.
(3) Class B Preferred Interim Dividends
If the Company is to pay interim dividends, it shall pay to
Class B Preferred Shareholders or Registered Class B Preferred
Share Pledgees entered or recorded in the Register of Shareholders
as of the end of the record date pertaining to such interim
dividends, in preference to Common Shareholders or Registered
Common Share Pledgees, interim dividends of surplus for each Class
B Preferred Share in an amount determined by a resolution adopted
at a meeting of the Board of Directors (the "Class B Preferred
Interim Dividends") up to one-half of the Class B Preferred
Dividend Base Amount.
(4) Non-cumulative Clause
If the amount of distribution of surplus per Class B Preferred
Share paid to a Class B Preferred Shareholder or Registered Class B
Preferred Share Pledgee in any particular business year does not
reach the Class B Preferred Dividend Base Amount, the shortfall
amount per Class B Preferred Share shall not accumulate and carry
over to subsequent business years.
(5) Non-participation Clause
No distribution of surplus in excess of the Class B Preferred
Dividend Base Amount shall be paid to Class B Preferred
Shareholders or Registered Class B Preferred Share Pledgees, except
for (i) distribution of surplus provided for in Article 758, Item
8(b) of the Companies Act or Article 760, Item 7(b) thereof, which
may be paid in the process of an absorption-type company split by
the Company, or (ii) distribution of surplus provided for in
Article 763, Item 12(b) thereof or Article 765, Paragraph 1, Item
8(b) thereof, which may be paid in the process of an
incorporation-type company split by the Company.
(6) Order of Priority
The Class A Preferred Shares and the Class B Preferred Shares
shall have the same order of priority in respect of payment of
distribution of surplus.
9. Distribution of Residual Assets
(1) Class B Preferred Distribution Amount of Residual Assets
If the Company is to distribute residual assets, it shall pay to
Class B Preferred Shareholders or Registered Class B Preferred
Share Pledgees, in preference to Common Shareholders or Registered
Common Share Pledgees, an amount for each Class B Preferred Share
equal to the amount paid in per Class B Preferred Share (provided
that if the Class B Preferred Shares have been subject to a share
split, gratis allotment of shares, share consolidation, or any
other similar event, such amount will be appropriately adjusted)
plus the Amount Equal to Accrued Class B Preferred Dividends
provided for in Item (3) below.
(2) Non-participation Clause
No distribution of residual assets shall be made to Class B
Preferred Shareholders or Registered Class B Preferred Share
Pledgees, except as provided for in Item (1) above.
(3) Amount Equal to Accrued Class B Preferred Dividends
The Amount Equal to Accrued Class B Preferred Dividends shall
mean, as of the day on which residual assets are distributed (the
"Distribution Date"), the amount calculated by multiplying the
number of days in the period from the first day (inclusive) of the
business year which includes the Distribution Date to the
Distribution Date (inclusive) by the Class B Preferred Dividend
Base Amount, and then dividing that product by 365 (calculated to
the three decimal places denominated in yen and rounded up to the
two decimal places). However, that if the Class B Preferred Interim
Dividends have been paid to Class B Preferred Shareholders or
Registered Class B Preferred Share Pledgees in the business year
which includes the Distribution Date, the amount so paid shall be
deducted accordingly from the amount of such Amount Equal to
Accrued Class B Preferred Dividends.
(4) Order of Priority
The Class A Preferred Shares and the Class B Preferred Shares
shall have the same order of priority in respect of distribution of
residual assets.
10. Voting Rights
Unless otherwise provided for in the laws and regulations, Class
B Preferred Shareholders shall not have voting rights at General
Meeting of Shareholders. Ten (10) shares shall constitute one unit
of the Class B Preferred Shares.
11. Put Option with Common Shares as Consideration
(1) Put Option with Common Shares as Consideration
Each Class B Preferred Shareholder is entitled to request the
Company, at any time on or after the day on which an amount to be
paid in for the Class B Preferred Shares was paid, to acquire all
or part of the Class B Preferred Shares held by such Class B
Preferred Shareholder in accordance with laws and regulations (the
"Put Option with Common Shares as Consideration") in exchange for
the delivery of Common Shares in such number as provided for in
Item (2) below (the "Common Shares Subject to Put Option"), and the
Company shall deliver the Common Shares Subject to Put Option to
such Class B Preferred Shareholder to the extent permitted under
laws and regulations in exchange for acquiring the Class B
Preferred Shares subject to such Put Option with Common Shares as
Consideration.
However, if, as of the day on which the Put Option with Common
Shares as Consideration is exercised by a Class B Preferred
Shareholder pursuant to this paragraph (the "Put Option Date with
Common Shares as Consideration"), the Number of Residual Authorized
Shares (as defined below; here and hereinafter the same) is less
than the Aggregate Number of Common Shares Subject to Put Option
(as defined below; here and hereinafter the same), the Put Option
with Common Shares as Consideration shall become effective only
with respect to the Class B Preferred Shares in a number
(calculated to the one decimal place and rounded down to the
nearest whole number; if less than zero (0), then such number shall
be zero (0)) obtained by multiplying (i) the number of the Class B
Preferred Shares subject to the Put Option with Common Shares as
Consideration exercised by each Class B Preferred Shareholder by
(ii) the number obtained by dividing the Number of Residual
Authorized Shares by the Aggregate Number of Common Shares Subject
to Put Option, and no Put Option with Common Shares as
Consideration shall be deemed to have been exercised with respect
to the Class B Preferred Shares subject to the Put Option with
Common Shares as Consideration other than those Class B Preferred
Shares with respect to which the Put Option with Common Shares as
Consideration becomes effective. Upon such partial acquisition, the
Class B Preferred Shares to be so acquired shall be determined by a
lottery, a pro rata allotment in proportion to the number of the
Class B Preferred Shares subject to the Put Option with Common
Shares as Consideration, or any other reasonable method determined
by the Board of Directors of the Company.
The "Number of the Residual Authorized Shares" shall mean the
number that represents the difference between (I) the total number
of shares to be issued of the Company as of the Put Option Date
with Common Shares as Consideration and (II) the sum of (i) the
number of issued shares (excluding treasure stock (limited to the
Common Shares)) as of such Put Option Date with Common Shares as
Consideration and (ii) the number of shares that the holders of new
share subscription rights (excluding those which the first day of
the period provided for in Article 236, Paragraph 1, Item 4 of the
Companies Act has not arrived) as of such Put Option Date with
Common Shares as Consideration acquire pursuant to the provisions
of Article 282 of the Companies Act.
The "Aggregate Number of Common Shares Subject to Put Option"
shall mean the number (calculated to the one decimal place and
rounded up to the nearest whole number) obtained by dividing by the
relevant exercise price as provided for in Items (3) through (5)
below as of such Put Option Date with Common Shares as
Consideration the amount obtained by multiplying the number of the
Class B Preferred Shares with respect to which a Class B Preferred
Shareholder exercises the Put Option with Common Shares as
Consideration on such Put Option Date with Common Shares as
Consideration by the amount to be paid in per Class B Preferred
Share (provided that if the Class B Preferred Shares have been
subject to a share split, gratis allotment of shares, share
consolidation, or any other similar event, such amount will be
appropriately adjusted).
(2) Number of Common Shares to be Delivered in Exchange for
Acquisition of Class B Preferred Shares
The number of Common Shares to be delivered in exchange for
acquisition of Class B Preferred Shares shall be the number
obtained by dividing by the exercise price provided for in Items
(3) through (5) below the amount obtained by multiplying the number
of the Class B Preferred Shares subject to the Put Option with
Common Shares as Consideration by the amount to be paid in per
Class B Preferred Share (provided that, if the Class B Preferred
Shares have been subject to a share split, gratis allotment of
shares, share consolidation, or any other similar event, such
amount will be appropriately adjusted). Any fraction of a share
that arises in the total number of Common Shares to be delivered in
exchange for the acquisition of Class B Preferred Shares subject to
the Put Option with Common Shares as Consideration shall be
discarded, and in such case, the payment of money shall be made
pursuant to Article 167, Paragraph 3 of the Companies Act.
(3) Initial Exercise Price
The initial exercise price shall be 200 yen.
(4) Revision of the Exercise Price
On or after the day immediately after the day on which an amount
to be paid in for Class B Preferred Shares was paid, the exercise
price shall be revised to an amount (calculated to the two decimal
places denominated in yen and rounded to the one decimal place)
equal to ninety (90) % of the Market Price as of the Put Option
Date with Common Shares as Consideration (as defined below)
(hereinafter the exercise price after such revision shall be
referred to as the "Revised Exercise Price"). However, if the
Revised Exercise Price exceeds 300 yen (the "Maximum Exercise
Price"), then the Revised Exercise Price shall be the Maximum
Exercise Price, and if the Revised Exercise Price falls below 30
yen (the "Minimum Exercise Price"), then the Revised Exercise Price
shall be the Minimum Exercise Price. Each of the Maximum Exercise
Price and the Minimum Exercise Price shall be subject to adjustment
provided for in Item (5) below.
"Market Price as of the Put Option Date with Common Shares as
Consideration" shall mean the average of the daily closing price
(including the value of quotation) of Common Shares of the Company
in regular trading on the Tokyo Stock Exchange, Inc. for the five
(5) consecutive trading days (excluding any day on which there was
no closing price, and the average shall be calculated to the two
decimal places denominated in yen and rounded to the one decimal
place) immediately prior to each Put Option Date with Common Shares
as Consideration (the "Exercise Price Calculation Period").
However, if the Class B Preferred Shareholder and the Company
execute a primary underwriting agreement under the Financial
Instruments and Exchange Actwith a financial instruments firm or
registered financial institution for the purpose of a secondary
offering of the Common Shares Subject to Put Option (including the
Class B Preferred Shareholder and the Company execute an agreement
similar to such primary underwriting agreement with a foreign
securities brokers for the purpose of a secondary offering of the
Common Shares Subject to Put Option outside Japan), when a Class B
Preferred Shareholder will exercise the Put Option with Common
Shares as Consideration from the day immediately after the day on
which the Company released that such primary underwriting agreement
was executed to the day immediately before the delivery date of
such secondary offering, the Exercise Price Calculation Period
shall be twenty (20) consecutive trading days commencing on the
120th trading day prior to the day on which the Company released
that the decision relating to such secondary offering is made. If,
during the Exercise Price Calculation Period, any of the events
provided for in Item (5) below occurs, the average of the daily
closing price (including the value of quotation) referred to above
shall be revised to a price that the Company deems appropriate in a
manner similar to that provided for in Item (5) below.
(5) Adjustment of the Exercise Price, the Maximum Exercise Price and the Minimum Exercise Price
(a) If any of the events provided for below occurs, the exercise
price, the Maximum Exercise Price and the Minimum Exercise Price
shall be adjusted as follows (however, the exercise price shall be
adjusted pursuant to this Item (5) only where any of the events
provided for below occurs during the period from when the closing
price (including the value of quotation) of Common Shares of the
Company in regular trading is fixed on the last day of the Exercise
Price Calculation Period to when the Put Option with Common Shares
as Consideration is exercised.):
(i) If the Common Shares are subject to a share split or gratis
allotment of shares, the exercise price shall be adjusted in
accordance with the following formula. In the case of a gratis
allotment of shares, the "number of issued Common Shares before
split" and the "number of issued Common Shares after split" in the
following formula shall be deemed to be replaced with the "number
of issued Common Shares before gratis allotment (excluding,
however, any Common Shares held by the Company at that time)" and
the "number of issued Common Shares after gratis allotment
(excluding, however, any Common Shares held by the Company at that
time)", respectively.
Exercise = Exercise x number of issued Common
price price Shares before split
after before
adjustment adjustment
number of issued Common
Shares after split
The exercise price after adjustment shall apply starting on the
day immediately after the record date for the share split, or the
effective date of the gratis allotment of shares (or, if a record
date for the gratis allotment of shares has been set, such record
date).
(ii) If the Common Shares of the Company are subject to a share
consolidation, the exercise price will be adjusted in accordance
with the following formula from the effective date of the share
consolidation.
Exercise = Exercise x number of issued Common
price price Shares before consolidation
after before
adjustment adjustment
number of issued Common
Shares after consolidation
(iii) If the Company issues Common Shares or disposes of Common
Shares held by the Company at an amount to be paid in that falls
below the market price per Common Share provided for in Item (d)
below (excluding in the case of a gratis allotment of shares, the
case of an acquisition of shares or new share subscription rights
(which includes new share subscription rights attached to bonds
with new share subscription rights; the same applies below in this
Item (5)) to be acquired in exchange for the delivery of Common
Shares, the case of exercise of new share subscription rights the
underlying shares of which are Common Shares, or the case of a
delivery of Common Shares because of a merger, share exchange or
corporate split), the exercise price shall be adjusted in
accordance with the formula provided for below (the "Exercise Price
Adjustment Formula"). The exercise price after adjustment shall
apply starting on the day immediately after the payment date (or,
if a payment period has been provided for, the last day of such
payment period), or, if a record date for an allotment to
shareholders has been provided for, starting on the day immediately
after such record date (the "Shareholder Allotment Date"). In the
case that the Company disposes of Common Shares held by it, the
"number of Common Shares to be newly issued" and "number of Common
Shares held by the Company" in the following formula shall be
deemed to be replaced with "number of Common Shares held by the
Company to be disposed of" and "number of Common Shares held by the
Company immediately before the disposal", respectively.
Exercise = Exercise x (number of + number of
price price issued Common Common Shares
after before Shares - to be newly
adjustment adjustment number of issued x
Common Shares amount to
held by the be paid in
Company) per share
--------------- ---------------
market price
per Common
Share
--------------- ---------------
(number of issued Common
Shares - number of shares
held by the Company)
+ number of Common Shares
to be newly issued
(iv) If the Company issues or disposes of any shares (including
by way of a gratis allotment of shares) that entitle their holder
to, by causing the Company to acquire or by being acquired by the
Company, receive Common Shares at an exercise price per Common
Share which falls below the market price per Common Share provided
for in Item (d) below, all the shares issued or disposed of shall
be deemed to have been acquired on the initial terms and conditions
and Common Shares shall be deemed to have been delivered on the
payment date for such shares (or, if a payment period has been
provided for, the last day of such payment period; here and
hereinafter the same in this Item (iv)), or in the case of a gratis
allotment of shares, on the effective date thereof (or, if a record
date for the gratis allotment of shares has been provided for, such
record date; here and hereinafter the same in this Item (iv)), or
if there is a Shareholder Allotment Date, on such date, and the
amount as the "amount to be paid in per share" in the Exercise
Price Adjustment Formula calculated by using such amount shall be
the exercise price after adjustment. The exercise price after
adjustment shall apply starting on the day immediately after the
payment date, in the case of a gratis allotment of shares, on the
day immediately after the effective date thereof, or if there is a
Shareholder Allotment Date, on the day immediately after such
date.
(v) If the Company issues new share subscription rights
(including by way of a gratis allotment of new share subscription
rights) that entitle their holder to, by being exercised or by
being acquired by the Company, receive Common Shares at a price of
the sum of the amount to be paid in for the new share subscription
rights per Common Share and the assets to be contributed on
exercise of the new share subscription rights which falls below the
market price per Common Share provided for in Item (d) below, all
the new share subscription rights issued shall be deemed to have
been exercised or acquired on the initial terms and conditions and
Common Shares shall be deemed to have been delivered on the
allotment date for the new share subscription rights in the case of
a gratis allotment of new share subscription rights, on the
effective date thereof (or, if a record date for the gratis
allotment of new share subscription rights has been provided for,
such record date; here and hereinafter the same in this Item (v))
or if there is a Shareholder Allotment Date, on such date, and the
amount as the "amount to be paid in per share" in the Exercise
Price Adjustment Formula calculated by using the sum of the amount
to be paid in for the new share subscription rights per Common
Share and the amount per Common Share of the assets to be
contributed on exercise of the new share subscription rights shall
be the Exercise Price after adjustment. The exercise price after
adjustment shall apply starting on the day immediately after the
date of allotment for such new share subscription rights, in the
case of a gratis allotment of new share subscription rights, on the
day immediately after the effective date thereof, or if there is a
Shareholder Allotment Date, on the day immediately after such
date.
(b) In addition to the events provided for in Item (a) above, if
any of the events in Item (i) through (iii) below occurs, the
Company shall appropriately adjust the exercise price upon giving
prior written notice to Class B Preferred Shareholders and
Registered Class B Preferred Share Pledgees to that effect and of
the reasons for the event, the exercise price after adjustment, the
day on which such adjustment applies and any other necessary
maters:
(i) Adjustment to the exercise price becomes necessary because
of a merger, share exchange, acquisition of all issued shares of
another company by way of a share exchange, share transfer,
absorption-type company split, succession to all or part of the
rights and obligations held by another company in relation to such
company's business by way of an absorption-type company split, or
incorporation-type company split;
(ii) Two or more events necessitating an adjustment to the
exercise price occur in proximity to each other, and it becomes
necessary to consider the effect of one of the events on the market
price that ought to be used in calculating the exercise price after
adjustment because of the other event(s); or
(iii) It otherwise becomes necessary to adjust the exercise
price because of the occurrence of an event which changes or has
the possibility of changing the number of issued Common Shares
(excluding, however, the number of Common Shares held by the
Company).
(c) If a calculation becomes necessary in adjusting the exercise
price, the calculation shall be made to the two decimal places and
rounded to the one decimal place.
(d) The market price per Common Share to be used in the Exercise
Price Adjustment Formula shall be the average daily closing price
(including the value of quotation) of the Common Shares of the
Company in regular trading on the Tokyo Stock Exchange, Inc. for
the thirty (30) consecutive trading days (excluding any day on
which there was no closing price, and the average shall be
calculated to the two decimal place denominated in yen and rounded
to the one decimal place) commencing on the 45th trading day prior
to the day on which the exercise price after adjustment is
applied.
(e) If, as a result of a calculation made in adjusting the
exercise price, the difference between the exercise price after
adjustment and the exercise price before adjustment is less than
one (1) yen, no adjustment to the exercise price will be made.
(6) Reasonable Measures
The exercise price provided for in Item (iii) through (v) above
shall be construed in terms of the prevention of dilution and the
substantive fairness between holders of shares of different
classes. If the calculation of the exercise price becomes difficult
or the result of calculation becomes unreasonable, the Company's
Board of Directors shall take the appropriate adjustment of the
exercise price and other reasonably necessary measures.
(7) Place at Which Put Options are Accepted
Mitsubishi UFJ Trust and Banking Corporation, Securities Agent
Division
1-4-5 Marunouchi, Chiyoda-ku, Tokyo
(8) Each Class B Preferred Shareholder who wishes to exercise an
put option shall fill out the Company's prescribed put option
request form with necessary information, including the number of
the Class B Preferred Shares subject to such put option, and submit
such form to the place at which put options are accepted provided
for in Item (7) above.
(9) A put option takes effect when the put option request form
reaches the place at which put options are accepted provided for in
Item (7) above, and the Company will acquire the Class B Preferred
Shares and the Class B Preferred Shareholder who has exercised the
put option will become a holder of common shares which the Company
will be required to deliver in exchange for such Class B Preferred
Shares.
(10) After the acquisition has taken effect, the Company shall
deliver common shares to the Class B Preferred Shareholder who has
exercised the put option by recording an increase in book-entry
shares in the shares-held column in the register of book-entry
account of Japan Securities Depository Center, Incorporated or an
account management institution as designated by such Class B
Preferred Shareholder.
12. Put Option with the Class A Preferred Shares as Consideration
(1) Put Option with the Class A Preferred Shares as Consideration
Each Class B Preferred Shareholder is entitled to request the
Company at any time on or after day on which an amount to be paid
in for the Class B Preferred Share was paid (the "Put Option with
Class A Preferred Shares as Consideration") to acquire all or part
of the Class B Preferred Shares held by such Class B Preferred
Shareholder in accordance with laws and regulations in exchange for
the delivery of the Class A Preferred Shares in such number as
provided for in Item (2) below (the "Class A Preferred Shares
Subject to Put Option"), and the Company shall deliver the Class A
Preferred Shares Subject to Put Option to such Class B Preferred
Shareholder to the extent permitted under laws and regulations in
exchange for acquiring the Class B Preferred Shares subject to such
Put Option with Class A Preferred Shares as Consideration.
(2) Number of the Class A Preferred Shares to be Delivered in
Exchange for Acquisition of the Class B Preferred Shares
The number of the Class A Preferred Shares to be delivered in
exchange for acquisition of the Class B Preferred Shares shall be
the number obtained by multiplying the number of the Class B
Preferred Shares subject to the Put Option with Class A Preferred
Shares as Consideration by 10.
(3) Place at Which Put Options are Accepted and Manner of Put Options etc.
The provisions of Paragraph 11, Items (7) through (9) shall
apply mutatis mutandis to the Put Option with Class A Preferred
Shares as Consideration.
13. Share Consolidation or Split, Allotment of Shares Offered
for Subscription, and Other Matters etc.
(i) In the case of share consolidation or split, the Company
will effectuate such share consolidation or split simultaneously
and in the same proportion with respect to the Common Shares, the
Class A Preferred Shares and the Class B Preferred Shares.
(ii) If the Company grants to its shareholders the right to
receive the allotment of shares offered for subscription or new
share subscription rights offered for subscription, the Company
will grant to Common Shareholders the right to receive the
allotment of Common Shares or new share subscription rights the
underlying shares of which are the Common Shares, as the case may
be, to Class A Preferred Shareholders the right to receive the
allotment of the Class A Preferred Shares or new share subscription
rights the underlying shares of which are the Class A Preferred
Shares, as the case may be, and to Class B Preferred Shareholders
the right to receive the allotment of Class B Preferred Shares or
new share subscription rights the underlying shares of which are
the Class B Preferred Shares, as the case may be, simultaneously
and in the same proportion.
(iii) If the Company makes a gratis allotment of shares or new
share subscription rights to its shareholders, the Company will
make a gratis allotment of the Common Shares or new share
subscription rights the underlying shares of which are the Common
Shares, as the case may be, to Common Shareholders, a gratis
allotment of the Class A Preferred Shares or new share subscription
rights the underlying shares of which are the Class A Preferred
Shares, as the case may be, to Class A Preferred Shareholders, and
a gratis allotment of the Class B Preferred Shares or new share
subscription rights the underlying shares of which are the Class B
Preferred Shares, as the case may be, to Class B Preferred
Shareholders, simultaneously and in the same proportion.
14. Changes in Laws and Regulations, etc.
If following a change or the like in laws or regulations it
becomes necessary to change the readings of terms in these Terms
and Conditions or take any other such measure, the Company's Board
of Directors shall take reasonably necessary measures.
[End]
Attachment IV-5-(1): Overview of the Nuclear Damage Compensation
Facilitation Corporation
(As of March 31, 2012)
(1) Name Nuclear Damage Compensation Facilitation
Corporation
----- ---------------------- ----------------------------------------------------------------
(2) Address Kyodo Tsusin Kaikan, 2-5, Toranomon
2-chome, Minato-ku, Tokyo
----- ---------------------- ----------------------------------------------------------------
(3) Title and Takehiko Sugiyama, Chairperson
name of the
representative
----- ---------------------- ----------------------------------------------------------------
(4) Purpose of Supply of funds necessary for nuclear
the business operators to compensate for damage,
etc.
----- ---------------------- ----------------------------------------------------------------
(5) Capital 14,000 million yen
----- ---------------------- ----------------------------------------------------------------
(6) Date of establishment September 12, 2011
----- ---------------------- ----------------------------------------------------------------
(7) Number of
issued shares
----- ---------------------- ----------------------------------------------------------------
(8) Date of fiscal March 31
year end
----- ---------------------- ----------------------------------------------------------------
Number of
(9) employees 57
----- ---------------------- ----------------------------------------------------------------
(10) Major customers Not applicable
----- ---------------------- ----------------------------------------------------------------
(11) Major shareholders Breakdown of the capital (14,000
and ratio million yen)
of shareholding * Governmental funding: 7,000 million yen
* 12 Nuclear operators, etc.: 7,000 million yen
----- ---------------------- ----------------------------------------------------------------
(12) Relationship Capital The Company made an approximately
with the Company relationship 17% investment in the Nuclear
Damage Liability Facilitation
Corporation
----- ---------------------- ------------------- -------------------------------------------
Transactional The Company has received funds
relationship from the Nuclear Damage Liability
Facilitation Corporation pursuant
to Article 41, Paragraph 1,
Item 1 of the Act to Establish
Nuclear Damage Liability Facilitation
Corporation.
----- ---------------------- ------------------- -------------------------------------------
Personnel N/A
relationship
------------------- -------------------------------------------
Status N/A
as a
related
party
----- ---------------------- ------------------- -------------------------------------------
(13) Performance and financial status over the past
three years
(Unit: million
yen)
----------------------------- --------------------- ------------------- --------------------
Fiscal year Fiscal year Fiscal year
ended March ended March ended March
2010 2011 2012
----------------------------- --------------------- ------------------- --------------------
Net assets Not determined
(*)
----------------------------- --------------------- ------------------- --------------------
Total assets
----------------------------- ------------------- ------------------- --------------------
Net assets per
share (yen)
-----------------------------
Net sales
-----------------------------
Operating profit
-----------------------------
Ordinary profit
-----------------------------
Net income
-----------------------------
Net income per
share (yen)
-----------------------------
Dividend per
share (yen)
----------------------------- ------------------- ------------------- --------------------
(*) Scheduled to be determined by the end of June 2012.
(Note)
Please note that the above to be an accurate and complete
translation of the original Japanese version prepared for the
convenience of our English-speaking investors. In case of any
discrepancy between the translation and the Japanese original, the
latter shall prevail.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEBKPDNBBKDBPB
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