Press Release Back Number(2006)

Chubu Telecommunications to be made a wholly owned subsidiary of Chubu Electric Power

February 1, 2006
Chubu Electric Power Co., Inc.
Chubu Telecommunications Co., Inc.

Chubu Electric Power Co., Inc. (headquarters: Higashi-ku, Nagoya; President: Fumio Kawaguchi) and Chubu Telecommunications Co., Inc. (CTC; headquarters: Naka-ku, Nagoya; President: Tadashi Morimoto) have reached basic agreement on making CTC a wholly owned subsidiary of Chubu Electric Power through an exchange of shares, effective March 31, 2006. This agreement is summarized below.


In advance of this exchange of shares, Chubu Electric Power plans to purchase individually all CTC shares held by members of the Chubu Electric Power group of companies.


This decision concerns the fundamental policy of making CTC a wholly owned subsidiary and related preparatory procedures. Details of the exchange of shares will be announced as soon as they have been decided.


1. Purpose for making CTC a wholly owned subsidiary:

In order to clarify the position of CTC, a telecommunications company, within the Chubu Electric Power group of companies, from September though October 2005 Chubu Electric Power purchased CTC shares through a takeover bid. In addition, in order to improve business efficiency and make strategic use of management resources, effective January 1, 2006 Chubu Electric Power spun off and transferred to CTC its businesses related to telecommunications cables.

Although Chubu Electric Power is proceeding in this way with efforts toward optimization of the structure of its group of companies, continued rapid transformations in the environment in which the telecommunications business operates require further strengthening of the relationship between Chubu Electric Power and CTC, as well as the swift and dynamic management of CTC's business operations. For these reasons, the two companies have decided to make CTC a wholly owned subsidiary of Chubu Electric Power through this exchange of shares.


2. Conditions and other details of the exchange of shares:

(1) Schedule of this exchange of shares (summary):

  • Late February 2006: Board of Directors meetings held to approve the agreement on exchange of shares
  • Late February 2006: agreement concluded on exchange of shares
  • Early March 2006: General meeting of shareholders held to approve the agreement on exchange of shares (CTC)*
  • March 31, 2006 (planned): Effective date of exchange of shares

* Pursuant to Article 358 of the Commercial Code of Japan (covering simple exchanges of shares), Chubu Electric Power will take part in this exchange of shares without going through the process of seeking approval for the agreement on the exchange of shares at the general meeting of shareholders.


(2) Rate of exchange of shares:

Chubu Electric Power and CTC have asked the third parties Nomura Securities Co., Ltd. (for Chubu Electric Power) and Seiei Audit Corporation (for CTC) to calculate rates of exchange of shares. After consultation between both companies concerning the related matters, including the methods and results of such calculation, the two companies have decided on the following rate of exchange of shares:


  Rate of exchange of shares
Chubu Electric Power(Parent company) 1
CTC(Wholly owned subsidiary) 14.75

Note: 14.75 shares of Chubu Electric Power stock will be allocated for each share of CTC stock.


The above rate of exchange of shares is subject to change, based on consultation between both companies in the event of any significant changes to the conditions serving as the assumptions on which the calculations were based.


(3) Number of shares allocated through exchange:

Instead of issuing new shares, Chubu Electric Power will allocate 338,695 shares of treasury stock to CTC's shareholders in the above exchange of shares. However, no shares of Chubu Electric Power stock shall be allocated for the 2,040,030 shares* of CTC stock already held by Chubu Electric Power.

* This figure represents the sum of the 2,029,285 shares of CTC stock already held by Chubu Electric Power as of February 1, 2006 and the 10,745 shares of CTC stock that Chubu Electric Power plans to purchase individually in advance of the exchange of shares.

Other conditions of this exchange of shares will be announced as soon as they have been decided.


3. Overview of CTC


  • Company name: Chubu Telecommunications Co., Inc.
  • Primary line of business: telecommunications
  • Founded: June 3, 1986
  • Headquarters: 2-5 Sakae 2-chome, Naka-ku, Nagoya
  • Representative: Tadashi Morimoto, President
  • Total shares issued and outstanding: 2,062,992.6
  • Shareholders (as of January 1, 2006):
    Chubu Electric Power Co., Inc.: 2,029,285 shares (98.37%)27
    other firms: 33,707.6 shares (1.63%)