December 13, 2006
For Immediate Release
Company Name:

GMO Internet Inc.
(TSE First Section, Code: 9449）

Address:

26-1 Sakuragaoka-cho Shibuya-ku Tokyo JAPAN

Representative:

Masatoshi

Kumagai,

CEOandRepresentative

Director
Contact:

Masashi Yasuda, Managing Director

Telephone:+81 3 5456 2555（Switchboard）
http://www.gmo.jp

URL:

New Stock to be Issued in Allocation of Shares to Third Party
In the Board of Directors meeting held by this company today, December 13, 2006,
it was resolved to issue new stock for an allocation of shares to a third party. Details
are as follows.

1. New Stock Issuance - Outline(1)

Number of new shares to be issued: 10,000,000 Common Shares(2)

Issue Price:\763 /per share(3)

Total Value of Stock Issue:\7,630,000,000(4)Capital Incorporation:\382/ per share(5)

Aggregate Capital Incorporation: \3,820,000,000(6)Application Period:

December 22, 2006 to December 29, 2006

(7)

Payment Date:

December 29, 2006

(8)

Purchaser and Allocated No. ofShares:

All Issued Shares will be allocated to theCEO of this company, Masatoshi Kumagai(9)

Each of the points is conditional on notification in accordance with
Securities and Exchange Laws.

No delivery date is listed above as no new share certificates will be issued.

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2. Changes in Issued Stock (Changes in Capital)
Current Number of Shares Outstanding: 62,128,378（December 13, 2006）（Current Capital: \3,328,299,187）
Increase in Number of Shares: 10,000,000（Increase in Capital: \3,820,000,000）
Total Number of Shares after Increase in Capital:72,128,378（Capital after increase in capital \7,148,299,187）
3. Reasons for Increase in Capital and Application of Funds(1) Reasons for Increase in Capital
As announced on December 11, 2006, for reasons including delayed initialplanning for an increase in excess interest repayment claims in the group’sloans and credit business, a \3.6 billion decrease is projected in theconsolidated adjustments account of the loans and credit company in theconsolidation, GMO NetCard Inc.

Also, for the same reasons a loss on appraisalof stock in affiliated companies on GMO NetCard stock of \5.5 billion isexpected.

In addition, in the same company, other measures are required

including a further \8.15 billion increase in the addition to the excessinterest repayment reserve after its revision.
In order to accommodate the reduction in net assets as a result of revised
accounting procedures, funds will be procured with the objective ofstrengthening our financial base through an increase in capital.
The method of increasing capital through allocation of shares to a third party
with the company CEO Masatoshi Kumagai as guarantor has been chosen to ensure
a quick procurement of funds.
(2) Method of Determining the Issue PriceThe issue price of \763 was determined with reference to the closing price(\847) on regular transactions of the company’s common stock released by theTokyo Stock Exchange on December 12, 2006, on the day prior to the decisionat the Board of Directors meeting (a discount of 9.92% was applied).
The advice of an external consulting organization was also sought, including
advice regarding the issue price, prior to the decision concerning an increasein capital through allocation of shares to a third party.
(3) Application of Funds
Total issue costs of the increase in capital through allocation of sharesto a third party will be roughly \26 million. When this amount is subtracted
from the total value of the stock issue (\7.63 billion) the remainder is \7.603
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billion. This amount will be allocated to strengthening our financial basethrough loans and investment in a subsidiary and other reinforcement ofcapital.
(4) Forecast Results and Dividends
We are currently calculating earnings estimates in consideration of thisincrease in capital. New figures will be released as soon as they are available.
(5) Standard Policy Regarding Distribution of Profit to Shareholders
In regard to the dividend for the current term, as announced on December 11,
2006, the dividend for the end of December has been adjusted to reflect aconsolidated net loss resulting from the extraordinary loss incurred throughsuch measures as the allocation of an excess interest repayment fund.
As previously announced by the company, we place importance on retained
earnings for shareholders. It is our standard policy on dividend payouts toaim for a dividend ratio of 33% of consolidated current term net profit. We
express our deep regret to shareholders concerning the dividend for the currentterm. As of the next term we intend to observe the above policy regarding profit
allocation and the group will put all its energy into the early resumption ofdividend payments.
(6) Application of Internal Reserve
The internal reserve will be used to strengthen our financial base.
4. Outline of Purchaser(1) Outline of Purchaser
Purchaser Name: Masatoshi Kumagai
Number of Shares Allocated: 10,000,000
Amount to be Paid: \7,630,000,000
Relationship to this Company: CEO of this company
Investment in this Company: 2,000,000 shares（3.2％）（December 13, 2006）
When combined with shares owned by the company The Masatoshi Kumagai Office Ltd.
（22,400,000 shares）the total is 24,400,000 shares（39.3％）(December 13, 2006）(2) The Purchaser’s Policy Regarding Ownership of the Company’s Stock
The purchaser is a stable shareholder.

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(3) Items Regarding Reporting of the Transfer of the Allocation of New StockNo decision has been made between the company and the purchaser regarding
the continuous ownership or deposition of the allocated new shares
However if the purchaser decides transfer all or part of the concerned
allocated new shares within two years of the issue date (December 29, 2006),
the purchaser consents to immediately report to the company the name and addressof the person who will receive the shares, the number of shares to be transferred,
the date of transfer, the transfer price and the reason for and method oftransfer.
5. Schedule of Increase in Capital(1) Schedule of Increase in Capital （planned）
December 13, 2006 (Wednesday)

Decision to issue new stock by board ofdirectors

December 13, 2006 (Wednesday)

Securities

Registration

Statement(KantoLocal Finance Bureau）
December 21, 2006 (Wednesday)
December 22, 2006 (Friday) toDecember 29, 2006 (Friday)

Notification to come into effectApplication period

December 29, 2006 (Friday)

Payment date

December 29, 2006 (Friday)

Date of receipt of funds(2) Perspective on Future Increases in Capital
We will closely examine future business expansion and financial requirements
based on earnings estimates.
(3) This matter will not influence the condition of equity finance etc. carriedout over the past three years.

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(4) The Past Three Financial Years and Recent Stock Price Transition

Balance
Sheet
Month/Year
Opening
Price (yen)Year Ended Year Ended December 2004 Year Ended Year Ending
December
December
December
Up toAfter2003
2005
2006
February 26, February 27,2004
2005
December
December
December
December 2004
2003
2005
2006
374

1,340

1,785

2,405

2,905

High (yen)

2,260

1,850

3,400

2,975

Low(yen)2981,340

7,300□3,060
1,675□1,3701,862847

Closing
1,330
1,770
2,390
2,910
847
Price(yen)(notes) 1 The □ denotes highest and lowest ex-rights stock prices after astock split.
2 In 2004 the price listed for before February 26 is the Japan
Securities Dealers Association price and the price from February 27 is
the Tokyo Stock Exchange price.
3 In 2006, figures listed are the figures for December 12, 2006.

6. Major Shareholders after the Increase in Capital
Position

NameNo. of Shares

Percentage

Owned
1The Masatoshi Kumagai Office Ltd.

22,400,000

31.1％2Masatoshi Kumagai

12,000,000

16.6％

3

HSBC Fund Service J2Bayerische Vereinsbank A.G. Customer
Account
HSBC Fund Service J12,726,500

3.8％

1,886,600

2.6％

1,362,000

1.9％

Total Number of Issued Shares

72,128,378

100％

45(notes) This listing shows the impact of the increase in capital through allocationof shares to a third party on the number of shares as of June 30, 2006.
When combined the total shares owned by The Masatoshi Kumagai Office Ltd. andMasatoshi Kumagai is 34,400,000 (47.7%)

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