Press Release Back Number(2005)

Chubu Electric Power and Chubu Telecommunications conclude spin-off contract to transfer certain telecommunications cable equipment operations and associated areas of operations (fiber-optic cable leasing and FTTH businesses)

October 26, 2005
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 agreed to spin-off to CTC certain of Chubu Electric Power's telecommunications cable equipment businesses and associated areas of operations, including the fiber-optic cable leasing and fiber-to-the-home (FTTH, marketed under the commuf@ brand name) areas, as outlined below. (This agreement was previously announced on March 29 and June 6, 2005.)


Today, Chubu Electric Power and CTC announced the conclusion of a spin-off contract concerning this transaction.


1. Background


To aggressively develop the telecommunications operations of the overall Chubu Electric Group by improving business efficiency and strategically applying management resources, Chubu Electric Power and CTC have concluded a basic agreement on the transfer to CTC of certain of Chubu Electric Power's telecommunications cable equipment businesses and maintenance and other associated operations, as well as other related operational areas (fiber-optic cable leasing and FTTH operations). The two companies have been proceeding with preparations to transfer these operations.

The two companies have now reached a final agreement and concluded a spin-off contract concerning the separation and transfer of these businesses from Chubu Electric Power to CTC effective January 1, 2006.


2. Overview of the spin-off

(1) Specifics of the business units to be spun off

  1. 1) Certain Chubu Electric Power's telecommunications cable equipment businesses* and maintenance and other associated operations
  2. *Telecommunications cable equipment: equipment including fiber-optic and metal cables
  3. 2) The fiber-optic cable leasing business and a telecommunications business offering ultra-high-speed fiber-optic Internet access services (FTTH)

(2) Schedule

Spin-off contract signed: October 26, 2005

General shareholders' meeting held to approve the spin-off contract (Chubu Electric power):
Pursuant to Article 374-22, Section 1 of the Commercial Code of Japan (regarding simple spin-offs), the Company will separate this business without the approval of a shareholders' meeting.

General shareholders' meeting held to approve the spin-off contract (CTC): November 10, 2005

Effective date of spin-off: January 1, 2006

(3) Spin-off method

Chubu Electric Power will spin off these businesses and transfer them to CTC, which will assume all related operations following the spin-off.

(4) Allocation of stock shares

To ensure a fair and forthright transaction, Chubu Electric Power and CTC asked a third party to calculate the share allocation ratio. Based on the results of assessments by this third party, the companies agreed to transfer 1,286,663 shares of CTC stock to Chubu Electric Power.

(5) Rights and obligations succeeded to by CTC

As of the effective date of the spin-off, CTC will succeed to the assets and liabilities and all attendant rights and obligations and contracts associated with the business units being spun off. However, CTC shall be exempt from certain liabilities and employment contracts for Chubu Electric Power employees involved in the above businesses.