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Conclusion of Share Transfer Agreement for Sale and Purchase of Shares in Chubu Telecommunications Co., Inc.
KDDI Corporation
Chubu Electric Power Co., Inc.
2008/01/25
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Resolutions were passed at meetings of the Boards of Directors of KDDI Corporation (hereafter "KDDI") and Chubu Electric Power Company, Inc. (hereafter Chubu Electric) held on January 25, 2008, agreeing on the conclusion of a share transfer agreement for a partial transfer of shares in Chubu Telecommunications Co., Inc. (hereafter CTC) from Chubu Electric to KDDI on April 1, 2008. The details of this agreement are presented below.
With this share transfer, CTC will become a subsidiary of KDDI.
 | 1. Reason for Share Transfer |
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KDDI and Chubu Electric are committed to using their combined management resources to create a more solid foundation for their telecommunications business in the Chubu Region, enabling the provision of highly convenient telecommunications services that are responsive to customer needs. KDDI believes that the share transfer will enable the company to use the operating base established by CTC (customer base, infrastructure, etc.) to further extend its telecommunications business in the Chubu Region. Chubu Electric is confident that the expansion of CTC will enable it to make an even greater ongoing contribution to the Chubu Region in the field of telecommunications.
| 2. Details of Share Transfer |
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KDDI will acquire 1,660,709 shares in CTC held by Chubu Electric (80.5% of the company's total shares).
On the day of the share transfer, rights and obligations in respect of telecommunications lines used in CTC's business operations will be transferred from CTC to Chubu Electric through spin-off.
| 3. Outline of CTC |
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(As of September 30, 2007) |
(1) Business name |
Chubu Telecommunications Co., Inc. |
(2) Representative |
Yoku Mukaiyama, President and Director |
(3) Headquarter location |
2-5 Sakae 2-Chome, Naka-ku, Nagoya, Aichi Prefecture |
(4) Date established |
June 3, 1986 |
(5) Primary business |
Telecommunications |
(6) Fiscal term |
March 31 |
(7) Number of employees |
568 (As of March 31, 2007) |
(8) Main business locations |
Nagoya headquarters, Nagoya branch, Okazaki branch, etc. |
(9) Capital (million yen) |
38,816 |
(10) Total shares issued and outstanding |
2,062,992.6 |
(11) Major shareholders and holding ratio |
Chubu Electric (100%) |
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(12) Results for most recent fiscal years
Fiscal term |
March 2006 |
March 2007 |
Operating revenues (million yen) |
32,035 |
40,279 |
Operating income (million yen) |
1,637 |
-1,058 |
Ordinary income (million yen) |
346 |
-2,003 |
Net income (million yen) |
451 |
-1,954 |
Total assets (million yen) |
144,297 |
134,814 |
Net assets (million yen) |
86,694 |
84,739 |
Dividend per share |
No dividend payments. |
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| 4. Parties to sale and purchase of shares |
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Acquisition |
Transfer |
(1) Business name |
KDDI Corporation |
Chubu Electric Power Company, Incorporated |
(2) Representative |
Tadashi Onodera, President and Chairman |
Toshio Mita, President and Director |
(3) Headquarters |
3-2 Nishi-Shinjuku 2-Chome, Shinjuku-ku, Tokyo |
1, Higashi-shincho, Higashi-ku, Nagoya, Aichi Prefecture |
(4) Primary business |
Telecommunications |
Electric power |
(5) Relationship |
Mutual business relationship |
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| 5. Number of shares to be sold/purchased, purchase price, and ownership following sale/purchase |
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| (1) |
Number of shares to be sold/purchased and ownership following sale/purchase
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KDDI |
Ownership |
Chubu Electric |
Ownership |
Shareholdings prior to
sale/purchase
(Number of voting rights) |
0 shares
(0) |
0% |
2,062,992.6 shares
(2,062,992) |
100% |
Number of shares to be
sold/purchased
(Number of voting rights) |
1,660,709 shares
(1,660,709) |
— |
1,660,709 shares
(1,660,709) |
— |
Shareholdings following
sale/purchase
(Number of voting rights) |
1,660,709 shares
(1,660,709) |
80.5% |
402,283.6 shares
(402,283) |
19.5% |
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| (2) |
Purchase price
37,932 million yen
The purchase price has been agreed upon based on an evaluation by a third party.
The final purchase price will be adjusted and fixed at the time of purchase based on the financial status of CTC and other considerations.
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| 6. Schedule |
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January 25, 2008 |
Resolution of Board of Directors of KDDI, resolution of Board of Directors of Chubu Electric, conclusion of share transfer agreement |
April 1, 2008 |
Sale of shares (closing) |
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| 7. Future outlook |
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Both companies project that this share transfer will have a minimal effect on results for the next operating period.
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