Back to 2008 listTransfer of Telecommunications Cable Equipment Business for Power Operations from Chubu Telecommunications Co., Inc., Through Spin-Off
January 25, 2008
Chubu Electric Power Co., Inc.
Chubu Electric Power (hereafter Chubu Electric) and Chubu Telecommunications Co., Inc. (hereafter CTC), held Boards of Directors meetings on January 25, 2008, at which it was decided that CTC would spin off its telecommunications cable equipment business for electric power operations (hereafter the CTC spin-off) to Chubu Electric, which will take over operations effective April 1, 2008. The two companies made the decision to enter on a contract for division and merger, which was concluded the same day, and the details are announced below.
Chubu Electric and KDDI Corporation (hereafter KDDI) held Boards of Directors meetings on January 25, 2008, at which they decided to conclude a share transfer agreement. On the assumption that the CTC spin-off would be effective, the agreement calls for Chubu Electric to transfer a portion of its CTC shares to KDDI. For details, please see the simultaneously issued announcement, "Conclusion of Share Transfer Agreement for Sale and Purchase of Shares in Chubu Telecommunications Co., Inc."
1. Purpose of the Company Spin-Off
In transferring management rights in CTC to KDDI, Chubu Electric intends to modify the CTC field of specialization to better suit it to the telecommunications sector that addresses the market at large. Therefore operations related to the telecommunications cable equipment business for electric power operations that CTC has been conducting for Chubu Electric will be spun off from CTC and transferred to Chubu Electric.
2. Overview of the Company Spin-Off
(1) Spin-off schedule
| Board of Directors approves division and merger contract | January 25, 2008 |
| Conclusion of contract for division and merger | January 25, 2008 |
| Division and merger becomes effective | April 1, 2008 (scheduled) |
In order for the CTC spin-off to satisfy the requirements of Article 784, Paragraph 1 and Article 796, Paragraph 3 of the Company Law, Chubu Electric and CTC both plan to conduct the division and merger without obtaining approval at general shareholder meetings.
(2) Spin-off method
The division and merger treats CTC as the dividing company and Chubu Electric as the merging company.
(3) Substance of the assignment involved in this spin-off
CTC is entirely a subsidiary of Chubu Electric, which therefore will not pay any money or transfer any shares to CTC.
(4) Increase in capital and related factors arising from the spin-off
The capitalization of Chubu Electric will not change as a result of the CTC spin-off.
(5) Dividing company's handling of new stock reservation rights and bonds with preemptive rights
CTC has not issued any new stock reservation rights or bonds with preemptive rights.
(6) Rights and obligations taken on by the merging company
Chubu Electric will take on rights and obligations relating to the telecommunications cable equipment business for electric power operations of CTC.
(7) Expectation of performance
There is every expectation that the liabilities that should be borne by Chubu Electric and CTC following the CTC spin-off will be met by their due date.
3. Overview of companies involved in the spin-off
| (1) Business name | Chubu Electric Power Co., Inc.(Merging company) | Chubu Telecommunications Co., Inc.(Dividing company) |
| (2) Business description | Electric power and other businesses | Telecommunications and other businesses |
| (3) Date established | May 1, 1951 | June 3, 1986 |
| (4) Headquarters location | 1 Higashi-shincho, Higashi-ku, Nagoya-shi, Japan | 2-5 Sakae 2-Chome, Naka-ku, Nagoya, Aichi Prefecture |
| (5) Name and title of representative | Toshio Mita, President and Director | Yoku Mukaiyama, President and Director |
| (6) Capital (million yen) | 430,777 | 38,816 |
| (7) Total shares issued and outstanding | 779,004,665 | 2,062,992.6 |
| (8) Shareholders' equity (million yen) | 1,821,405 (consolidated) | 81,231 (non-consolidated) |
| (9) Total assets (million yen) | 5,657,197 (consolidated) | 132,671 (non-consolidated) |
| (10) Fiscal term | March 31 | March 31 |
| (11) Major shareholders and holding ratio | Master Trust Bank of Japan, Ltd. 6.44% Meiji Yasuda Life Insurance Company 5.48% Japan Trustee Services Bank, Ltd. 4.62% Nippon Life Insurance Company 4.42% Bank of Tokyo-Mitsubishi UFJ 2.45% Trust and Custody Services Bank, Ltd. 2.28% Sumitomo Mitsui Banking Corporation 1.92% Mizuho Corporate Bank, Ltd. 1.81% Kondo Cotton Spinning Co., Ltd. 1.51% Chubu Electric Power Share Repurchase and Investment Association 1.34% |
Chubu Electric Power Co., Inc. 100.0% |
4. Overview of operating division to be transferred
(1) Description of business of division to be transferred
Telecommunications cable equipment for electric power operations and associated maintenance operations
(Telecommunications cable equipment: Fiber-optic cable, metal cable, and related equipment)
(2) Operating results of division to be transferred (period ended March 2007)
| Telecommunications cable equipment business for power operations (a) | CTCResults for period ended March 2007 (b) | Ratio (a/b) | |
| Operating revenues | 8,658 |
40,279 |
21.50% |
| Operating losses | 66 |
1,058 |
— |
| Ordinary losses | 66 |
2,003 |
— |
(3) Asset and liability items to be transferred, with amounts (April 1, 2008 projected)
| Assets | Liabilities | ||
| Item | Book value | Item | Book value |
| Current assets | 750 |
Current assets | 133 |
| Fixed assets | 34,769 |
Fixed assets | — |
| Total | 35,519 |
Total | 133 |
Note: The above contains projected figures for April 1, 2008, and therefore the amounts of assets and liabilities actually to be transferred will differ from the above amounts.
5. Status of listed companies following the spin-off
There will be no changes to the business name, business descriptions, headquarters location, representative, capital, or fiscal term.
6. Future outlook
As a result of the CTC spin-off, Chubu Electric will continue to engage in the telecommunications cable equipment business for electric power operations. There is expected to be only a very slight influence on business results.
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