ETIC decides to support Granvista Hotel & Resort Co., Ltd.
December 1st, 2011
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”) has decided to provide
support to Granvista Hotel & Resort Co., Ltd. under Article 25, Clause 4 of the Enterprise
Turnaround Initiative Corporation of Japan Act (Act 63, of 2009, hereafter “the ETIC Act”).

1．Name of company concerned
Granvista Hotel & Resort Co., Ltd. (Hereafter, “Granvista”)

2．Name of financial institution jointly applying for rehabilitation support with Granvista
Sumitomo Mitsui Banking Corporation (hereafter “SMBC”)

3．Outline of business revitalization plan
Please see appendix

4．Comment from State Ministers in charge of ETIC
Prime Minister, Minister of Internal Affairs, Minister of Finance, Minister of Economy,
Trade and Industry: No opinion expressed
Minister of Health, Labour and Welfare: No objections. However, I request that theETIC will, after confirming that support will be provided to Granvista,
promptly ensure that discussions with workers are conducted andin the course of the provision of advice and guidance in theexecution of the business revitalization plan, will observe allapplicable laws, and will consult with workers to give due
consideration to their stable employment.

5．Comment from State Ministers supervising business activities
Minister of Health, Labour and Welfare: No opinion expressed
Minister of Land, Infrastructure, Transport and Tourism: I have no objections on thismatter. Regarding the support to be provided, I would like this1

project to contribute to the revival of the overall regional hotelindustry, and the advancement of Japan as a country of tourism
including the promotion of international tourism.

6．Debt purchase application period
From Thursday December 1st, 2011 for receipt by ETIC no later than Thursday
February 2nd, 2012.

7．Request for temporary suspension
Under Article 27, Clause 1 of the ETIC Act, financial institutions have been requested not torecover loans or exercise any other rights they may have as creditors, other than thosepermitted under the corporate revitalization plan, before the end of the debt purchase period
as per item 6 above.

8．Treatment of trade creditors
The decision by ETIC to provide support involves requesting rescheduling of debt
repayment and other such measures from the financial institutions providing loans toGranvista. No request for support will be made with regard to trade debt. Therefore there will
be no impact on trade creditors.

9．Basis for decision to support
ETIC‟s basis for deciding to provide support is as follows.
9.1 Rationale
Granvista owns regionally important stand-alone operations (such as Sapporo Grand
Hotel, Sapporo Park Hotel and Kamogawa Sea World), as well as hotels and Japanese
inns (Shiraraso Grand Hotel, Kurobe Kanko Hotel, Shogetsu Grand Hotel) that are
regional leaders.
These operations have a significant presence in each of a number of regions in which
tourism is an important economic driver (as recognized under the Tourism AreasDevelopment Act), which means that the withdrawal of Granvista from its businesses
would have a not inconsiderable impact on their tourism overall.

2Granvista manages added-value accommodation facilities as a chain operator of fullservice hotels and inns in regional cities, and as such has useful management resources.
In particular, it has considerable management experience in the efficient running ofmulti-task operations in mid-sized facilities, managing more operations than its industry
peers. In an environment in which there is a shortage of operators able to manage
regional hotels and inns with their incumbent business issues, Granvista can undertake
management contracts of these hotels and inns and play a role in supporting therevitalization of regional business bases through tourism.
Granvista works with more than 2,000 suppliers, agencies and other businessstakeholders, and as of the end of October 2011 had just under 2,800 employees.
Accordingly, another significant reason for ETIC‟s support is the impact of the businesson the living fundamentals of the regional populace.
9.2 Role of ETICIn deciding to support Granvista, ETIC‟s planned role is as follows:(1) Act as a coordinator among the financial institutions involved(2) Acquire existing shares(3) Provide capital of approximately ¥1.6 billion(3) Supply management personnel.
With regard to (1) above, ETIC will seek debt principal repayment rescheduling fromfinancial institutions and other lenders to enable the early recommencement of delayedinvestment in maintenance and renewal of facilities, and to improve financial stability
through strengthening capital. With regard to (2) above, ETIC will secure governancecontrol by acquiring existing shares from main shareholders. With regard to (3), ETIC will
underwrite a new share issue of approximately ¥1.6 billion to provide capital for strategic
investment and structural reform initiatives. With regard to (4), ETIC will place
management staff within the company after it is capitalized in line with (3) above, tosupport steady implementation of the business revitalization plan.

ENDS3

Appendix: Outline of Business Revitalization PlanSection 1: Overview of company receiving support (as of October 31st, 2011)
1.1 Name of company
Granvista Hotel & Resort Co., Ltd. (Hereafter, “Granvista”)
1.2 Headquarters
26-9 Shinkawa 1-chome, Chuo-ku, Tokyo
1.3 Date established
August 27th, 1958
1.4 Capital¥100 million
1.5 Shares
Ordinary shares:
Number of shares authorized

20,000,000 shares

Number of shares outstanding

14,135,000 sharesClass A preferred shares:
Number of shares authorized

2,000,000 shares

Number of shares outstanding

2,000,000 shares

1.6 Main business
Operation of hotels (city hotels, resort hotels, business hotels), contracted
management of facilities, and operation of general sea leisure facilities, highway
restaurants, toll roads, and golf courses
1.7 Number of employees
Full-time employees: 1,085 (including 6 executive directors)
Semi full-time employees: 1,691
Total employees: 2,776
1.8 Main facilities
Head office:26-9 Shinkawa 1-chome, Chuo-ku, Tokyo
Operations:
City hotels (Sapporo Grand Hotel, Sapporo Park Hotel, Osaka Bay Tower)
Resort hotels (Shiraraso Grand Hotel, Kurobe Kanko Hotel, Shogetsu Grand Hotel,others)
Business hotels (Hotel Com‟s Ginza, others)
Aquariums (Kamogawa Sea World)
Highway restaurants (Sano, Ashigara, Otsu)
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Golf courses (Tomakomai Golf Resort 72), others
1.9 Main banks and other financing organizations
Sumitomo Mitsui Banking Corporation and seven other banks
1.10 Financial Overview
FY2009/3

FY2010/3

FY2011/3

Sales¥34,945 million¥33,299 million¥31,218 million

EBITDA¥3,294 million¥3,019 million¥3,139 million

Net profit(¥1,498 million)(¥1,299 million)¥98 million

Net assets(¥434 million)(¥1,724 million)(¥1,626 million)

Section 2: Background and circumstances leading to request for ETIC support
Since its establishment, Granvista has managed hotels, leisure facilities and otherbusinesses, and through a series of merger absorption acquisitions in various regions hasexpanded group operations to become a leading regional operator of city hotels, traditional
Japanese inns and other accommodation facilities, typified by Sapporo Grand Hotel.
Granvista‟s approach has been to continue promoting the brand of its acquisitions, making
maximal use of the historical value and regional presence of facilities while using detailed
methods to improve revenues and strengthen management of individual operations andthereby contribute to group earnings.
Over the course of its business development, Granvista has accumulated extensive
experience and skill in managing hotels and inns in regional cities and tourist regions. From
1970, Granvista actively expanded business hotel operations in metropolitan areas
nationwide, and in the mid 1980s it acquired the coastal Kamogawa Sea World leisurefacility, becoming a comprehensive tourism operator.
However, entering the 1990s, tourism demand fell and business performance declined withthe collapse of the bubble economy. Interest-bearing debt rose to a high level to support
parent company management, and the management situation became severe. In 2005,Granvista received partial debt forgiveness from financial institutions, and embarked on
management reform with capital input from a sponsor. However, earnings fell below
expectations, influenced by changes in the market after the Lehman shock and other factors.
As a result of refinancing limitations from the heavy debt burden, the competitive position offacilities declined, and some operations became unprofitable. This further worsened overall
5profitability.
Under these circumstances, Granvista established a three-year medium-term plan tostrengthen business management in other to increase profitability, while reducing personnel
and other costs, and use resulting cash flow from these to renovate facilities and restore
competitiveness. However, the company struggled to meet targets in the aftermath of theGreat East Japan Earthquake in March 2011, and amid considerable uncertainty with regard
to overall market recovery, decided that it would face difficulty undertaking business
revitalization and returning to a growth trajectory.
After discussions with its main bank SMBC, Granvista resolved to apply to ETIC, aiming toundertake business revitalization with the support of ETIC and maximize the value of debt
owed to financial institutions.

Section 3: Outline of business revitalization plan

1．Basic policy
The two core elements of this plan are 1) to restore a sound operating status to thecompany to enable stable continuation of operations, and 2) strengthen and make
optimal use of the unique management resources accumulated during the course of its
development as a comprehensive tourism operator, namely its hotel and innmanagement experience. As part of this, as stated in 4. below, financial institutions andother lenders will be requested to reschedule debt repayment and to implement a debt
equity swap (DES).

2．Business plan
The main elements of the plan are as follows.
(1) Resume delayed investment
Cash flow arising from receiving debt repayment deferral from financial institutions
will be used to implement key items of investment in maintenance and renewal offacilities. The stable annual investment will restore an appropriate standard toenable sustainable operations.
6(2) Revise business portfolio
A portion of the capital provided by ETIC will be used to restructure the businessportfolio by withdrawing from certain unprofitable operations. Any businesswithdrawals will be undertaken at an appropriate time with due consideration ofbusiness revenues and other such factors.
(3) Redefine head office functions and invest strategically in core locations
Granvista‟s business growth as a chain operator in the management of hotels, inns
and aquarium will be further developed by redefining and strengthening its head
office functions. A certain portion of the capital provided by ETIC will be used forstrategic investment in particular operations, with the aim of restoring thecompetitive position of the operations (or at a minimum ensuring that there is no
destruction of brand value of the operations).
(4) Clarify management structure, policy and decision-making process
A more dynamic organizational structure will be created by reviewing themanagement structure and clarifying the management policy and decision-making
process. The respective roles of head office and each operating location will beadjusted, and a structure created under which the status of each operation can beanalyzed and strategically shared within the context of overall group direction.
3. Business revitalization
There are no plans to conduct corporate reorganization as part of this business revitalization
plan. Approximately 99% of Granvista‟s ordinary shares, and all of its Class A preferredshares, will be acquired by ETIC following the decision to purchase debt. Accordingly, ETIC
will acquire the governance of Granvista, and move forward with the execution of thisbusiness revitalization plan. Moreover, in order to stabilize Granvista‟s financial base andexecute this revitalization plan promptly and appropriately, Granvista will issue
approximately 1.6 billion yen of ordinary shares , which are to be undertaken by ETIC.
Further more, a request is to be made to SMBC that a certain portion of the debt currently
owed to SMBC be converted to equity through a debt equity swap, which will beimplemented through allocation of newly issued classified stock (Class B preferred stock) in
exchange with the present debt for consideration-in-kind, improving financial stability
through stronger capital .

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4. Request for financial support from financial institutions, and other leaders.
A request to change the loan repayment schedule will be made to financial institutions. A
request will also be made to SMBC to implement the abovementioned DES.
5. Financing
With the provision of financial support as outlined in this business revitalization plan,
namely the injection of capital by ETIC and a facility of working capital from SMBC todeal with seasonal funding requirements, we believe Granvista will not face capitalinsufficiencies.
6. Conformance with standards for support(1) Possession of effective management resourcesGranvista possesses effective management resources in that it has the capacity toimprove the management of its high added value facilities such as full service hotels andtraditional Japanese inns through several innovations to its operations. Moreover,Granvista‟s facilities have a significant presence in each of a number of regions in which
tourism is an important economic driver.
(2) Standard for productivity improvement
Successful implementation of this business revitalization plan is expected to increase
productivity within three years of the date of the decision to provide support.
(3) Standards for financial soundness
Successful implementation of this business revitalization plan is expected to enable
Granvista to meet the required standards with respect to financial soundness within
three years of the date of the decision to provide support.
(4) Potential to refinance within three years
Implementation of the business revitalization plan is expected to significantly improve
the financial condition of the Granvista, enabling it to reach an appropriate level offinancial stability for the repayment of debt principal and interest, thereby making
refinancing highly possible.
(5) Connection with structural oversupply
Implementation of the business revitalization plan will not increase the supply capacity ofGranvista. Accordingly, the plan has been judged as „not hindering the resolution ofstructural oversupply‟ with reference to Article 19 of the Act on Special Measures for
Industrial Revitalization and Industrial Innovation(6) Status of consultations with workforce
While there is no labor union connected with Granvista, it is planned that meetings with8

employees will be scheduled promptly after announcement of the decision by ETIC toprovide support, and opportunities provided to discuss aspects of the business
revitalization plan, along with employment and working conditions.
Section 5: Responsibility of management
In accordance with the replacement of main shareholders, the current president, who
was selected by main shareholders, and persons with concurrent posts as main
shareholders, will resign from their positions.
Section 5: Responsibility of shareholders
The responsibility of shareholders will be shown in the erosion of their invested capitalthrough the fair market price purchase by ETIC of remaining shares held by mainshareholders.
ENDS9