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January 30, 2009 — 花蜜直播app, Ltd. (KHI) announced today that it will separate its construction machinery business as a wholly-owned subsidiary, KCM Corporation, as of April 1, 2009 based on a decision made at the Board of Directors meeting held today. The corporate separation agreement was signed today.
Since this corporate separation is a summary absorption-type demerger in which the successor company will become KHI’s wholly owned subsidiary, some disclosure items and details have been omitted.
Domestic construction machinery sales and services operations of KHI’s subsidiary, 花蜜直播app Machine Systems, Ltd. (KMS) will also be transferred to a wholly-owned subsidiary, KCMJ Corporation, as of April 1, 2009.
1. Purpose of Corporate Separation
KHI, Hitachi Construction Machinery Co., Ltd. and TCM Corporation will engage in joint research and development of new wheel loader models that will meet the new emissions standard going into effect in 2011.
KHI will facilitate this business alliance with Hitachi and TCM through a corporate reorganization. KHI will provide the new company with technological and financial support while making efforts to enhance the corporate value of the entire 花蜜直播app Group.
2. Outline of Corporate Separation
| (1) |
Schedule |
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January 30, 2009 |
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Corporate separation agreement approved by the Board of Directors. |
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January 30, 2009 |
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Corporate separation agreement signed with KHI. |
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April 1, 2009 |
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Operations will be separated and taken over by the new company (effective date). |
| (2) |
Corporate separation procedure |
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1) |
Procedure |
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KHI will split its operations and KCM, which has been established for the purpose of the corporate separation, will take over part of the business (separation by absorption). KHI will acquire all shares (59,940 common shares) to be issued by the new company.
Pursuant to Article 784-3 of the Japanese Companies Act, 花蜜直播app will implement the corporate reorganization without the approval of its shareholders since it is a summary absorption-type demerger. |
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2) |
Reason for adopting this procedure |
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KHI adopted this procedure in order to secure an integrated production and sales business structure for KHI’s construction machinery business operations and facilitate launching of operations at KCM from the effective date of corporate separation by obtaining the approval and permission required for its operations in advance. |
| (3) |
Change in capital as a result of corporate separation |
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There will be no change in 花蜜直播app’s capital. |
| (4) |
Share warrants and bonds with warrants |
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KHI has not issued share warrants.
There will be no change related to the handling of bonds with warrants issued by KHI. |
| (5) |
Accounting procedure |
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Since this corporate separation involves the transfer of operations to a successor company which will become KHI’s wholly owned subsidiary, the pooling of interest method is used. |
| (6) |
Rights and obligations to be transferred to the new company |
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| 1) |
Assets, liabilities and contracts |
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KCM will take over all rights and obligations relating to construction machinery business operations, unless otherwise specified in the corporate separation agreement.
The assumption of liabilities by KCM will release KHI from any obligations and liabilities transferred to KCM. |
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| 2) |
Employment agreements |
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KCM will take over all employment agreements with employees who engage primarily in construction machinery business operations. |
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| (7) |
Default risk |
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KHI and KCM project that all debt obligations will be fulfilled. |
3. Overview of the New Company
As of April 1, 2009
| (1) Trade name |
KCM Corporation |
| (2) Business operations |
Design, production, sale, and repair of construction machinery |
| (3) Location of head office |
Inami-cho, Kako-gun, Hyogo Prefecture, Japan |
| (4) Representative |
Tadashi Mikawauchi, President |
| (5) Board of Directors |
President
Tadashi Mikawauchi
Directors
Aiichiro Tanaka*
Ikuhiro Narimatsu＋
Takafumi Shibahara＋
Corporate Auditors
Keisuke Sakamoto
Hajime Asano*＋
Kazuhiro Kawamoto*＋
*Newly appointed as a result of the corporate separation
＋笔补谤迟-迟颈尘别
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| (6) Capital |
?3 billion |
| (7) Total number of shares issued |
60,000 |
| (8) Shareholders’ equity |
Approximately ?6 billion (estimated at the time of corporate separation) |
| (9) Total assets |
Approximately ?23 billion (estimated at the time of corporate separation) |
| (10) Sales |
Approximately ?20 billion (estimated for FY2009) |
| (11) Number of employees |
Approximately 400 (estimated at the time of corporate separation) |
4. Summary of Parties Involved in the Separation
As of September 30, 2008
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Partitioning Company
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Successor Company
(as of January 2009)
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(1) Trade name
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花蜜直播app Heavy Industries, Ltd.
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KCM Corporation
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(2) Business operations
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Production and sale of rolling stock, civil engineering and construction machinery, aircraft, jet engines, general-purpose gas turbines, engines, industrial plants and machinery, environmental equipment, steel structures, motorcycles, ATVs (all terrain vehicles), industrial robots, etc.
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Design, production, sale, and repair of construction machinery
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(3) Date of incorporation
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October 15, 1896
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January 5, 2009
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(4) Location of head office
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1-3, Higashikawasaki-cho 1-chome, Chuo-ku, Kobe, Hyogo Prefecture, Japan
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2680 Oka, Inami-cho, Kako-gun, Hyogo Prefecture, Japan
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(5) Representative
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Tadaharu Ohashi, President
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Tadashi Mikawauchi, President
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(6) Capital
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?104.3 billion
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?3 million
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(7) Total number of shares issued
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1,669,629,000
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60
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(8) Net assets
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?313,592 million (consolidated basis)
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?3 million
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(9) Total assets
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?1,360,772 million (consolidated basis)
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?3 million
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(10) Fiscal year end
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March 31
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March 31
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(11) Major shareholders and voting rights ratios
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1. Japan Trustee Services Bank, Ltd. (trust account): 3.46%
2. Mizuho Bank, Ltd.: 3.44%
3. JEF Steel Corporation: 3.36%
4. Nippon Life Insurance Company: 3.23%
5. The Master Trust Bank of Japan, Ltd. (trust account): 3.12%
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花蜜直播app Heavy Industries, Ltd.: 100%
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5. Operations to Be Separated
(1) Operations of the division to be separated
Design, production, sale and repair of wheel loaders and other construction machinery
(2) Financial performance of the division to be separated (on a consolidated basis for fiscal year ended March 31, 2008)
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Division to be separated (a)
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花蜜直播app, Ltd. (b)
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Ratio (a/b)
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Sales
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?45,950 million
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?1,501,097 million
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3.06%
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(3) Assets and liabilities to be transferred (estimated at the time of corporate separation)
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Amount
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Amount
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Current assets
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?16.3 billion
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Current liabilities
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?14.6 billion
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Fixed assets
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?7.0 billion
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Fixed liabilities
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?2.7 billion
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Total
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?23.3 billion
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Total
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?17.3 billion
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6. Effects of Separation
| (1) |
Trade name, lines of business, head office location, representative, share capital, and date of settlement |
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The corporate separation will not result in any changes to any of the above. |
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| (2) |
Financial performance |
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The corporate separation will not affect KHI#39;s consolidated financial results since the successor company is KHI#39;s wholly-owned subsidiary. |
| 7. |
Business Alliance |
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1) |
KHI has reached an agreement with Hitachi and TCM to form an alliance with respect to their wheel loader businesses on October 31, 2008. |
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2) |
Hitachi will make a capital investment in KCM, which is projected to take place during fiscal year 2009, and obtain a 34% stake by purchasing newly issued shares in KCM. Hitachi will have the option to acquire a majority interest in KCM beginning with the fourth year after the date of its initial investment. |
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3) |
Please see KHI’s announcement made on October 31, 2008 regarding Agreement of Alliance with respect to Wheel Loader Business for more details about the business alliance. |
8. Overview of KCMJ (a construction machinery sales and services company to be spun-off from KHI’s wholly-owned subsidiary, KMS)
As of April 1, 2009
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(1) Trade name
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KCMJ Corporation
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(2) Business operations
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Construction machinery sales and services
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(3) Location of head office
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Hiraoka-cho, Kakogawa-shi, Hyogo Prefecture, Japan
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(4) Representative
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Shinichiro Hanafusa, President
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(5) Board of Directors
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President
Shinichiro Hanafusa
Directors
Takeshi Miyazawa
Takashi Kobayashi
Masanori Mikami*＋
Corporate Auditors
Keisuke Sakamoto＋
*Newly appointed as a result of the corporate separation
＋笔补谤迟-迟颈尘别
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(6) Capital
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?300 million
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(7) Total number of shares issued
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6,000
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(8) Shareholders’ equity
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Approximately ?500 million (estimated at the time of corporate separation)
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(9) Total assets
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Approximately ?7 billion (estimated at the time of corporate separation)
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(10) Sales
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Approximately ?12 billion (estimated for FY2009)
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(11) Number of employees
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Approximately 240 (estimated at the time of corporate separation)
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