East Japan Railway Company
(Mutsutake Otsuka, President and CEO)
Tetsudo Kaikan Co., Ltd.
(Kazuhiko Suzuki, President)
Nihon Hotel Co., Ltd.
(Yutaka Nochiide, President)
May 12, 2004
The Board of Directors of East Japan Railway Company (hereinafter as "JR East"), Tetsudo Kaikan Co., Ltd. (hereinafter as "Tetsudo Kaikan") and Nihon Hotel Co., Ltd. (hereinafter as "Nihon Hotel") voted today to approve a share exchange that will result in Tetsudo Kaikan and Nihon Hotel becoming wholly-owned subsidiaries of JR East. Following approval by the shareholders of Tetsudo Kaikan and Nihon Hotel at general shareholders meetings of the two companies, each to be held on June 29, the share exchange is to take place on October 1. In accordance with the provisions of Article 358 of the Commercial Code regulating simple stock swaps, the transaction does not require the approval of JR East's shareholders. JR East will use treasury shares for the exchange, which requires shareholder approval under the provisions of Article 210 of the Commercial Code.
The JR East Group is conducting business consolidation and reorganization to achieve "management with a sense of speed and flexibility" and to raise corporate value under its New Frontier 21 medium-term business plan.
Recently, Tetsudo Kaikan and Nihon Hotel, both members of the JR East Group, and JR East have been promoting a development plan for the area around Tokyo Station. They determined that the creation of development and management structures based on rapid decision making is essential and that the most appropriate means of maximizing shareholder value would be to become wholly-owned subsidiaries of JR East.
In the future, all three companies will continue to develop and improve business in the Tokyo Station area while seeking to raise corporate value as part of a trusted lifestyle-enhancement services group.
(1) Schedule
May 12, 2004 | Boards of Directors approve the share exchange contract |
May 12, 2004 | Share exchange contract concluded |
June 29, 2004 (scheduled) | Tetsudo Kaikan and Nihon Hotel regular general shareholders meetings approve the share exchange contract |
October 1, 2004 (scheduled) | Exchange of shares |
(2) Share exchange ratios
Company | JR East (Parent) | Tetsudo Kaikan (Wholly-Owned Subsidiary) |
Share exchange ratio | 1 | 0.040 |
Company | JR East (Parent) | Nihon Hotel (Wholly-Owned Subsidiary) |
Share exchange ratio | 1 | 0.00063 |
Note: | 1. | Share allocation ratios Each share of Tetsudo Kaikan common stock shall be exchanged for 0.040 shares of JR East common stock. Each share of Nihon Hotel common stock shall be exchanged for 0.00063 shares of JR East common stock. |
2. | Bases for the share exchange ratios JR East requested that Mizuho Securities Co., Ltd. calculate the exchange ratios, and Tetsudo Kaikan and Nihon Hotel requested that Mitsubishi Securities Co., Ltd. also calculate the ratios. The figures referenced above were agreed upon by making reference to the results of both companies' calculations and through discussions by the three parties. |
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3. | Results, methods, and bases for calculations performed by third-party organizations Mizuho Securities used the market price standard method with respect to JR East's shares and the discounted cash flow (DCF) method and a comparison of similar companies with respect to the shares of Tetsudo Kaikan and Nihon Hotel and made its calculations taking these results into account. Mitsubishi Securities used the market price method with respect to JR East's shares and the discounted cash flow (DCF) method and compared the share prices of similar publicly-traded companies with respect to the shares of Tetsudo Kaikan and Nihon Hotel and made its calculations taking these results into account. |
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4. | Number of shares to be allocated under the exchange 7,434.06 shares of common stock |
(3) Share exchange payments
No money shall be paid in conjunction with the share exchanges.
(1) | Acquisition of treasury shares from the market The shares to be exchanged are to be acquired by purchasing them on the market following approval by the shareholders at a general shareholders meeting to be held by JR East as described in (2) below. |
(2) | JR East will seek approval from its shareholders at a general shareholders meeting concerning the type of shares to be acquired, the maximum number of shares to be acquired, and the maximum acquisition cost. |
(1) Name |
East Japan Railway Co., Ltd. (Parent) |
Tetsudo Kaikan Co., Ltd. (Wholly-owned Subsidiary) |
Nihon Hotel Co., Ltd. (Wholly-owned Subsidiary) |
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(2) Business activities | Passenger railway business Passenger automobile transportation business |
Real estate sale, purchase, leasing, management, intermediary services, and appraisal | Hotel and restaurant operation Real estate leasing and management |
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(3) Date established | April 1, 1987 | September 1, 1952 | August 28, 1950 | |||||||||||||||||||
(4) Location of head office | Shibuya-ku, Tokyo | Chiyoda-ku, Tokyo | Chiyoda-ku, Tokyo | |||||||||||||||||||
(5) President | Mutsutake Otsuka | Kazuhiko Suzuki | Yutaka Nochiide | |||||||||||||||||||
(6) Capital | 200 billion yen | 340 million yen | 150 million yen | |||||||||||||||||||
(7) Shares issued and outstanding |
4 million | 680,000 | 3 million | |||||||||||||||||||
(8) Shareholders' equity | 1,028.789 billion yen | 9.39 billion yen* | 813 million yen* | |||||||||||||||||||
(9) Total assets | 6,307.321 billion yen | 24.74 billion yen | 2.346 billion yen | |||||||||||||||||||
(10) End of fiscal year | March 31 | March 31 | March 31 | |||||||||||||||||||
(11) Number of employees | 68,857 | 132 | 109 | |||||||||||||||||||
(12) Major shareholders and ownership |
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(13) Main banks | Mizuho Corporate Bank Bank of Tokyo- Mitsubishi Sumitomo Mitsui Bank |
Mizuho Bank UFJ Bank |
Bank of Tokyo- Mitsubishi Mizuho Bank Sumitomo Mitsui Bank |
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(14) Capital and other relationships among the parties |
Capital | JR East owns 73.05% of Tetsudo Kaikan outstanding shares JR East owns 83.93% of Nihon Hotel outstanding shares |
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Personnel | JR East has assigned one managing director and two part-time directors to Tetsudo Kaikan. JR East has assigned one managing director, two part-time directors, and one part-time corporate auditor to Nihon Kaikan. |
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Transactional | JR East and Tetsudo Kaikan engage in land lease and other transactions JR East and Nihon Hotel engage in building lease and other transactions |
* ; As of March 31, 2003;
All other figures are as of March 31, 2004
JR East acquired 5,000 shares of Tetsudo Kaikan from Nagoya Terminal Building on April 1, 2004, bringing its ownership to 73.79%.
(15) | Financial results for the last three fiscal years (Figures are in million yen unless otherwise indicated) |
JR East | |||
Year | Fiscal Year Ended March 2002 |
Fiscal Year Ended March 2003 |
Fiscal Year Ended March 2004 |
Operating revenues |
1,901,977 | 1,899,488 | 1,897,242 |
Operating income |
279,565 | 301,366 | 307,526 |
Ordinary income |
99,330 | 164,071 | 183,209 |
Net income | 71,957 | 86,966 | 104,319 |
Net income per share |
17,989.30 yen | 21,693.96 yen | 26,035.59 yen |
Annual dividends per share |
5,000 yen | 8,000 yen | 6,000 yen |
Shareholders' equity per share |
220,350.61 yen | 231,206.85 yen | 257,153.14 yen |
Tetsudo Kaikan | Nihon Hotel | |||||
Year | Fiscal Year Ended March 2001 |
Fiscal Year Ended March 2002 |
Fiscal Year Ended March 2003 |
Fiscal Year Ended March 2001 |
Fiscal Year Ended March 2002 |
Fiscal Year Ended March 2003 |
Operating revenues |
11,228 | 10,921 | 11,126 | 3,746 | 3,702 | 4,031 |
Operating income |
409 | 716 | 883 | 191 | 142 | 145 |
Ordinary income |
629 | 802 | 944 | 192 | 144 | 143 |
Net income | 848 | 219 | 436 | 100 | 63 | 66 |
Net income per share |
1,247.42 yen | 322.59 yen | 642.62 yen | 33.66 yen | 21.27 yen | 22.26 yen |
Annual dividends per share |
50 yen | 50 yen | 75 yen | — | — | — |
Shareholders' equity per share |
9,553.76 yen | 13,951.04 yen | 13,809.02 yen | 227.50 yen | 248.77 yen | 271.09 yen |
(1) | Trade names, business activities, head offices, presidents There will be no changes in the trade names, business activities, head offices, or presidents of the three companies from the status indicated in section 4 above. |
(2) | Capital of JR East There will be no increase in capital of JR East as a result of the share exchange. |
(3) | Impact on financial results Tetsudo Kaikan and Nihon Hotel are currently subsidiaries of JR East. Consequently, there will be no impact on JR East's consolidated financial performance as a result of the share exchange. |