Back to 2006 listChubu Telecommunications to be made a wholly-owned subsidiary of Chubu Electric Power through an exchange of shares
February 22, 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) previously agreed to make CTC a wholly-owned subsidiary of Chubu Electric Power through an exchange of shares, effective March 31, 2006. (This agreement was announced February 1, 2006.) Today, both companies concluded the agreement on this exchange of shares.
1. Reasons for making CTC a wholly-owned subsidiary (unchanged from February 1 announcement):
To clarify the position of CTC within the Chubu Electric Power group of companies, from September though October 2005, Chubu Electric Power purchased CTC shares on the open market. In addition, to improve business efficiency and make strategic use of management resources, effective January 1, 2006, Chubu Electric Power spun off and transferred to CTC operations involving telecommunications cables.
Although Chubu Electric Power is proceeding based on these efforts toward an optimized structure for its group of companies, continued rapid transformations in the environment in which the telecommunications business operates require even stronger ties between Chubu Electric Power and CTC, as well as swift and dynamic management of CTC's operations. For these reasons, through this exchange of shares, the two companies have decided to make CTC a wholly-owned subsidiary of Chubu Electric Power.
2. Terms and other specifics of this exchange of shares:
(1) Rate of exchange of shares (unchanged from February 1 announcement):
Chubu Electric Power and CTC have asked third parties Nomura Securities Co., Ltd. (for Chubu Electric Power) and Seiei Audit Corporation (for CTC) to calculate rates of exchange of shares. Following consultations between the companies on issues such as the methods and results of such calculations, the two companies have determined the following rate of exchange of shares:
| Chubu Electric Power (Parent company) |
CTC (Wholly-owned subsidiary) |
|
| Rate of exchange of shares | 1 | 14.75 |
Note: 14.75 shares of Chubu Electric Power stock will be allocated for each share of CTC stock.
(2) Number of shares allocated through exchange:
Rather than issue new shares, Chubu Electric Power will allocate 338,696 shares of treasury stock to CTC's shareholders. However, no shares of Chubu Electric Power stock will be allocated for the 2,040,030 shares of CTC stock already held by Chubu Electric Power.
(3) Timetable for this exchange of shares (summary):
February 22, 2006: Board of Directors meetings held to approve the agreement on exchange of shares
February 22, 2006: Agreement concluded on exchange of shares
March 9, 2006: General meeting of shareholders held to approve the agreement on exchange of shares (CTC)*
March 31, 2006: 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 obtaining approval from the agreement on the exchange of shares in a general meeting of its shareholders
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 February 17, 2006):
Chubu Electric Power Co., Inc.: 2,040,030 shares (98.89%)
19 other firms: 22,962.6 shares (1.11%)
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