February 26, 2010

MODEC, INC.
Kenji Yamada, Chairman & CEO
Code: TSE 6269
Contact: Yasuhiro Takano, General Manager
Corporate Planning & Strategies
TEL: +81-3-6203-0200

Issuance of New Shares Through Third-Party Allotment, Business Alliance with MITSUI &CO., LTD. and Change in Major Shareholders
MODEC, INC. (MODEC) hereby announces, as set forth below, that it resolved, at its Board of Directors’Meeting held on February 26, 2010, to: (i) issue new shares through a third-party allotment to Mitsui
Engineering & Shipbuilding Co., Ltd. (MES); (ii) issue new shares through a third-party allotment to
MITSUI & CO., LTD. (MITSUI) (the issuance of new shares set forth in (i) and the issuance of new shares
set forth in (ii) are collectively referred to as the “Capital Increase Through the Third-Party Allotment”); and(iii) form a business alliance (the “Business Alliance”) with MITSUI, and that MODEC entered into abusiness alliance agreement with MITSUI (hereinafter the “Business Alliance Agreement”).
MODEC also hereby announces that MITSUI is expected to be a major shareholder of MODEC in
accordance with the Capital Increase Through the Third-Party Allotment.

I.

Issuance of New Shares Through Third-Party Allotment

1. Outline of Offering(1) Issue Date
(2) Number of Shares to Be
Newly Issued(3) Issue Price

Tuesday, April 6, 2010
9,000,000 shares of common stock
1,732 yen per share(4) Amount of Proceeds to Be
Raised(5) Method of Offering or
Allotment (Parties to Which
Shares Will Be Allotted)

15,588,000,000 yen(6) Others

Each of the items above shall be subject to the effectiveness ofthe securities registration statement filed under the Financial
Instruments and Exchange Act of Japan. For the terms andconditions of issuance, please see “I. 12. Terms and Conditionsof Issuance” below.

Third-party allotment(MES: 4,509,000 shares
MITSUI: 4,491,000 shares)-1-2. Purpose of and Reason for Offering
MODEC provides investments and loans to special purpose companies, established by MODEC, thatengage in the lease, operation and charter business of the Floating Production System (hereinafterreferred to as the “FPSO, etc.”) (FPSO: Floating Production, Storage and Offloading System) for theoilfield development promoted by MODEC. In recent years, lease, operation and charter projects of
FPSO, etc. (the “Charter Projects”) have been growing in project size and the amount of funds required
for the Charter Projects is drastically increasing; therefore, the funding requirements for the investments
and loans for the special-purpose companies established by MODEC in the Charter Projects are
increasing. In addition, the growth of the FPSO, etc. business can be expected as the development andproduction activities of offshore oilfields and gas fields in the deep sea area are expected to continue tobe active in the future. In such environment, MODEC intends to strive for the expansion of thisbusiness, and for that reason, it is essential for MODEC to maintain and enhance its financial position.
MODEC has selected MES, a parent company holding 50.1% of issued shares of MODEC, as one of theparties to which the shares will be allotted in the Capital Increase Through the Third-Party Allotment,
and MODEC has accepted one (1) Director and two (2) Corporate Auditors from MES for the purpose ofreceiving comprehensive advice on the management of the MODEC group. MODEC believes that it isimportant in terms of the business operation of MODEC that MES maintains its ratio of stock holding
even after the Capital Increase Through the Third-Party Allotment so that MODEC and MES maintainthe consolidated relationship.
In addition, in the situation where the funds required for the Charter Projects are drastically increasing,as mentioned above, it also has been becoming necessary to strengthen the creditworthiness of theCharter Projects and the fund-raising capability from financial institutions, by enhancing the cooperative
relationship in the Charter Project with MITSUI, which has been making investments, etc., to the special
purpose companies jointly with MODEC, through a business alliance with it. Furthermore, given it isexpected that the development and production activities of offshore oilfields and gas fields in the deepsea area will continue to be active in the future and that the demand for FPSO, etc. will expand, it will
become possible for MODEC to enhance its presence and competitiveness, being comparable to overseas
contractors, by utilizing the management resources and customer base, etc. of MITSUI. Therefore, asof today, MODEC entered into the Business Alliance Agreement with MITSUI, concerning which an
explanation is given in “II. Business Alliance with MITSUI” below. MODEC believes that it isnecessary, in order for the improvement of its corporate value and shareholder value, to strengthen thecooperative relationship with MITSUI, by allotting its shares by way of a third-party allotment to
MITSUI, the most important company to MODEC in terms of the operations strategy.
MODEC, upon considering this financing, examined various other options, taking into account the
influence on the existing shareholders other than MES and MITSUI. However, as mentioned above,
MODEC believes that (i) the maintenance of the consolidated relationship with MES, a parent company,(ii) the continued receipt of comprehensive advice from MES on the management of the MODEC groupand (iii) the enhancement of the cooperative relationship with MITSUI pursuant to the Business AllianceAgreement are the best ways to improve the corporate value and shareholder value of MODEC, MODEC
determined to issue new shares to both MITSUI and MES by way of the Capital Increase Through theThird-Party Allotment, which is a steady and prompt strategy of capital reinforcement.
In addition, as a result of the Capital Increase Through the Third-Party Allotment, the stock value of
MODEC will be diluted. However, as mentioned above, MODEC believes that the Capital Increase
Through the Third-Party Allotment will contribute to the enhancement of the corporate value and-2-shareholder value of MODEC, and will result in the improvement of the benefit to the existing
shareholders.
3. Amount, Use and Scheduled Timing of Expenditure of Proceeds to Be Raised(1) Amount of Proceeds to Be Raised (Approximate Net Amount)
Aggregate amount to be paid:
15,588,000,000 yen
Approximate costs of issuance:

70,000,000 yen

Approximate net amount:

15,518,000,000 yen(2) Use of Proceeds to Be Raised
MODEC plans to use 14,000,000,000 yen out of 15,518,000,000 yen which is the approximate net
amount described above for the investments and loans to the special purpose companies, establishedor to be established by MODEC, that engage in or will engage in the lease, operation or charterbusiness of FPSO, etc. The balance is planned to be used either for investments and loans to thespecial purpose companies, established or to be established by MODEC, that engage in or will
engage in the lease, operation or charter business of FPSO, etc., or for the repayment of thelong-term borrowings that MODEC borrowed as the funds for investments and loans to the special
purpose companies, established by MODEC, that engage in the similar lease, operation or charterbusiness of FPSO, etc. However, as of today, it is not yet determined for which the balance will beused.
The proceeds described above are scheduled to be paid out by the end of June 30, 2011.
As to the fund management until the time of expenditure, the funds will be managed in bankdeposits and applied for the repayment of the short-term borrowings pursuant to thecommitment-line agreements (which shall be limited to such agreements the terms and conditions ofwhich enable the borrowing of the amount equal to or more than the amount of expenditure uponrequest by MODEC, at the above-mentioned time when the expenditure of the funds for the capitalincrease is scheduled).
4. Rationale for the Use of Proceeds to Be Raised
MODEC considers that (i) securing (a) the funds for the investments and loans to the lease, operationand charter services of FPSO, etc., (the investments and loans to the special purpose companies,
established or to be established by MODEC, that engage in or will engage in the lease, operation andcharter business of FPSO, etc.) that are the important business fields for the development of the businessactivities of the MODEC group, and (b) the funds for repayment of the long-term borrowings that
MODEC borrowed as the funds for such investments and loans, and (ii) enabling the smooth and steady
implementation of the Charter Project, by the Capital Increase Through the Third-Party Allotment, willcontribute to enhance the corporate value and shareholder value through the improvement of profitabilityof MODEC. Therefore, MODEC believes that the use of the proceeds described above is reasonable
for the existing shareholders.
5. Rationale for Conditions of Issuance(1) Basis of Calculation of the Amount to Be Paid and Details Thereof
Referring to 1,786 yen, the average of the closing prices of shares of the common stock of MODEC-3-

on the Tokyo Stock Exchange, Inc. for the latest three (3) months until the business day immediately
preceding the day on which the Capital Increase Through the Third-Party Allotment was resolved at
its Board of Directors’ Meeting (from November 26, 2009, to February 25, 2010), the amount to be
paid is determined to be 1,732 yen per share (discount rate is 3.00%). The amount to be paid
described above represents the amount obtained by adding a 9.41% premium to 1,583 yen, theclosing price of the shares of common stock of MODEC on the Tokyo Stock Exchange, Inc. on
February 25, 2010, the business day immediately preceding the day on which the Capital Increase
Through the Third-Party Allotment was resolved at its Board of Directors’ Meeting.
The reason for using the average share price during the latest three (3) months as the basis of thecalculation is that MODEC considers that using an average share price for a certain period, which isa leveled price, as the basis of calculation is more objective and reasonable, rather than using theclosing price of the business day immediately preceding the day on which the Capital Increase
Through the Third-Party Allotment was resolved at its Board of Directors’ Meeting, which is atemporary share price, taking into consideration the recent volatile stock market, fluctuation in thevalue of stock of MODEC and trading volume thereof, etc. In addition, the discount rate wasdetermined upon consultation between MODEC and MES or MITSUI, as the case may be, taking
into consideration the financial condition, the expectations concerning performance and the businessenvironment, etc. of MODEC.
MODEC considers that the amount to be paid described above is not considered to be the amountespecially favorable to MES or MITSUI, because, among other things, as mentioned above, suchamount is equal to or more than the amount obtained by multiplying 0.9 by the closing price of theshares of common stock of MODEC on the Tokyo Stock Exchange, Inc. on the business day
immediately preceding the day on which the Capital Increase Through the Third-Party Allotment
was resolved at its Board of Directors’ Meeting and complies with the “Guidelines Concerning
Treatment Such As the Capital Increase Through Third-Party Allotment, Etc.” stipulated by theJapan Securities Dealers Association.
(2) Rationale for the Judgment that the Number of Shares to Be Issued and the Level of Dilution of
Shares are Reasonable
The number of shares to be issued is 24.1% (the percentage of voting rights is 24.1%) of the total
number of issued shares of common stock of MODEC before the implementation of the Capital
Increase Through the Third-Party Allotment, which is 37,408,000 shares (the total number of voting
rights is 374,039); this represents 19.4% (the the percentage of the voting rights is 19.4%) of thetotal issued shares of common stock of MODEC after the implementation of the Capital Increase
Through the Third-Party Allotment, which is 46,408,000 shares (the total number of voting rights is464,039). Therefore, the stock value of MODEC will be diluted. However, MODEC believes
that (i) the maintenance and enhancement of the relationships with MES and MITSUI and (ii) the
prompt securement of (a) the funds for the investments and loans for the lease, operation and charterbusiness of FPSO, etc. (the investments and loans to the special purpose companies, established or to
be by MODEC, that engage in or will engage in the lease, operation and charter business of FPSO,etc.) that are the important business fields for the future development of the business activities of the
MODEC group and (b) the funds for repayment of the long-term borrowings that MODEC borrowed
as the funds for such investments and loans will be essential in order to maximize the benefit of theexisting shareholders, to improve the corporate value of MODEC and to increase shareholder value.
Therefore, MODEC considers that the number of shares to be issued and the level of dilution in the
Capital Increase Through the Third-Party Allotment are reasonable for the existing shareholders.

-4-The Board of Directors’ Meeting of MODEC has resolved the capital increase through thethird-party allotment to both MES and MITSUI in the Capital Increase Through the Third-Party
Allotment by the unanimous approval of all the Directors who participated in the deliberation andresolution after sufficient discussion and consideration. In light of avoiding conflict of interest in
the Board of Directors’ Meeting of MODEC, neither one (1) External Director of MODEC who isconcurrently serving as a Director of MES nor one (1) External Director of MODEC who was
concurrently serving as a Director of MES until June 26, 2009, did participate in the deliberation or
resolution made at the Board of Directors’ Meeting of MODEC with respect to the capital increase
through the third-party allotment to MES in the Capital Increase Through the Third-Party Allotment,
and neither one (1) External Corporate Auditor of MODEC who is concurrently serving as a
Corporate Auditor of MES nor one (1) External Corporate Auditor of MODEC who is concurrently
serving as an employee of MES did participate in the deliberation made at the Board of Directors’Meeting of MODEC with respect to the capital increase through the third-party allotment to MITSUIin the Capital Increase Through the Third-Party Allotment. Also in light of avoiding conflict ofinterest in the Board of Directors’ Meeting of MODEC, one (1) External Director of MODEC who isconcurrently serving as an Executive Officer of MITSUI did not participate in the deliberation or
resolution made at the Board of Directors’ Meeting of MODEC with respect to the capital increase
through the third-party allotment to MITSUI in the Capital Increase Through the Third-Party
Allotment.

6. Reasons for Selecting MES and MITSUI, and Other Related Matters(1) Outline of MES and MITSUI(i)

Trade name

Mitsui Engineering & Shipbuilding Co., Ltd.

(ii)

Number of shares tobe allotted

4,509,000 shares(iii) Amount to be paid

7,809,588,000 yen(iv)

Location

6-4, Tsukiji 5-chome, Chuo-ku, Tokyo, Japan(v)

Representative

Yasuhiko Katoh
President and Representative Director(vi)

Principal business

Design, manufacturing and engineering, etc. of ships and vessels,
steel constructions, machinery, plants, etc.

(vii) Stated capital (Note 1) 44,384 million yen(viii) Date of incorporation

July 31, 1937

(ix)

Total number of
830,987,176 sharesissued shares (Note 1)(x)

Fiscal term end(xi)

Number of employees
10,324 (consolidated)(Note 1)(xii) Major business
partners

March 31

MITSUI & CO., LTD., Mitsui O.S.K. Lines, Ltd.

(xiii) Major banks having
Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank,transaction with MES Ltd., The Chuo Mitsui Trust and Banking Company, Limited, The
Hyakujushi Bank, Ltd., The Sumitomo Trust and Banking Co., Ltd.

-5-

MITSUI & CO., LTD. (Standing proxy: Trust & Custody(xiv) Major shareholders
and their shareholding Services Bank, Ltd.)
ratio (Note 1)
Japan Trustee Services Bank, Ltd. (Trust account 4G)

5.16%
3.77%

The Hyakujushi Bank, Ltd.

3.40%

Japan Trustee Services Bank, Ltd. (Trust account)

3.25%

Japan Trustee Services Bank, Ltd. (The Chuo Mitsui Trustand Banking Company, Limited retirement benefit trust
account)

2.80%

The Master Trust Bank of Japan, Ltd. (Trust account)

2.72%

Citibank Hong Kong PBG Client Hong Kong (Standing
Proxy: Citibank Japan Ltd.)

2.71%

Mitsui Life Insurance Company Limited (Standing Proxy:Japan Trustee Services Bank, Ltd.)

2.28%

Sumitomo Mitsui Banking Corporation

1.64%

Mitsui Sumitomo Insurance Company, Limited
1.62%
MES holds 18,742,000 shares (50.1%) of the(xv) Relationship between Capital
relationshipcommon stock of MODEC.
MODEC and MES
Out of ten (10) executive officers (six (6) Directors
and four (4) Corporate Auditors) of MODEC, one
Personnel(1) Director and two (2) Corporate Auditors
relationshipconcurrently serve as executive officers and(Note 1）
employees of MES. In addition, two (2)employees of MES have been seconded to
MODEC.
There is no business relationship between MODEC
and MES to be described herein. In addition,
Business
there is no business relationship between therelationshiprelated persons and the related companies of
MODEC and the related persons and the relatedcompanies of MES to be described herein.
Related party
Since MES is a parent company of MODEC, MES
relationshipis considered a related party of MODEC.
(xvi) Results of operations and financial conditions for the last three (3) years(Million yen, unless otherwise specified)Year ended/As of March 31
Fiscal term
2007
2008
2009
Consolidated net assets
165,824
175,642
160,744
Consolidated total assets
703,436
711,545739,302
Consolidated net assets
per share (yen)171.07
182.60169.59Consolidated net sales
622,800
659,215
686,655
Consolidated operating
profit20,712
36,11826,854
Consolidated ordinary
income18,61432,232
23,415
Consolidated net income
19,416
16,56010,641
Consolidated net income
per share (yen)
23.42
19.98
12.84
Dividend per share (yen)
3.50
4.00
4.00
Note:

1. Stated capital, total number of issued shares, number of employees, and major shareholders and their-6-

shareholding ratio described above are current as of March 31, 2009.
described above is current as of December 31, 2009.

(i)

Trade name

MITSUI & CO., LTD.

(ii)

Number of shares tobe allotted

4,491,000 shares

In addition, the personnel relationship(iii) Amount to be paid

7,778,412,000 yen(iv)

Location

2-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo, Japan(v)

Representative

Masami Iijima
President and Chief Executive Officer(vi)

Principal business(i) Distribution, import and export, offshore trading andmanufacturing of products in the business areas of iron and steel
products, mineral and metal resources, machinery and infrastructure
projects, chemicals, energy, food and retail, consumer services,
information industry, etc., (ii) provision of retail services,
information-communication services, technology services,transportation services, financial services and other services, and (iii)
industrial investment in new businesses such as resource
development, IT, renewable energy and environmental business.

(vii) Stated capital (Note 1) 339,626 million yen(viii) Date of incorporation

July 25, 1947

(ix)

Total number of
1,824,928,240 sharesissued shares (Note 1)(x)

Fiscal term end(xi)

Number of employees
39,864 (consolidated)(Note 1)March 31(xii) Major business
partners

Major companies, etc. engaging in business related to resources andenergy, logistics network, consumer services or infrastructure.

(xiii) Major banks havingtransaction with
MITSUI

Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank,
Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., The Chuo Mitsui
Trust and Banking Company, Limited, Japan Bank for International
Cooperation(xiv) Major shareholders
The Master Trust Bank of Japan, Ltd. (Trust account)and their shareholding Japan Trustee Services Bank, Ltd. (Trust account)ratio (Note 1)
Japan Trustee Services Bank, Ltd. (Trust account 4G)

9.03%
8.58%
5.88%

Sumitomo Mitsui Banking Corporation

2.10%

Nippon Life Insurance Company

1.92%

The Chuo Mitsui Trust and Banking Company, Limited(Standing proxy: Japan Trustee Services Bank, Ltd.)

1.68%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1.66%

The Chase Manhattan Bank N.A. London secs lending
omnibus account (Standing proxy: Mizuho Corporate
Bank, Ltd.)

1.63%

Mitsui Sumitomo Insurance Company, Limited

1.35%

Mizuho Corporate Bank, Ltd. (Standing proxy: Trust &1.31%
Custody Services Bank, Ltd.)(xv) Relationship between Capital
MITSUI holds 2,466,500 shares (6.59%) of the
MODEC and MITSUI relationshipcommon stock of MODEC.
-7-Out of ten (10) executive officers (six (6) Directors
and four (4) Corporate Auditors), one (1) Director
Personnelof MODEC is concurrently serving as an Executive
relationship
Officer of MITSUI. In addition, two (2)(Note 1）
employees of MITSUI have been seconded to
MODEC.
Jointly with MODEC, MITSUI has made equity
contributions, etc. to the special purpose companies
Business
established by MODEC for the purpose of holding,relationshipleasing, operating and chartering FPSO, etc. in thelease, operation and charter business of FPSO, etc.
for oilfield development promoted by MODEC.
MITSUI is not considered a related party ofRelated party
MODEC. Also, the related persons and related
relationshipcompanies of MITSUI are not considered relatedparties of MODEC.
(xvi) Results of operations and financial condition for the last three (3) years (US GAAP)(Million yen, unless otherwise specified) (Note 2)
Year ended/As of March 31
Fiscal term
2007
2008
2009
Consolidated shareholder
equity2,110,279
2,183,660
1,881,663
Consolidated total assets
9,813,312
9,537,829
8,364,243
Consolidated shareholder
equity per share (yen)1,182.48
1,202.03
1,033.22
Consolidated net sales
15,271,649
17,009,056
15,347,925
Consolidated operating
profit282,801
374,828
394,671
Pre-tax net income fromcontinuing operations
309,174
402,004
247,307
Consolidated net income
301,502410,061
177,607
Consolidated net income
per share (yen)174.26227.2097.59
Dividend per share (yen)34
46
25
Notes: 1. Stated capital, total number of issued shares, number of employees, major shareholders and theirshareholding ratio, and personnel relationship described above are current as of March 31, 2009.
2. The consolidated net sales and consolidated operating income are presented in accordance with theaccounting practices of Japan, for the convenience of investors in Japan. The consolidated net sales
represent the total amount of (i) transactions conducted by MITSUI and its consolidated subsidiaries ascontracting parties and (ii) transactions conducted by MITSUI and its consolidated subsidiaries as proxies.

(2) Reason for Selecting MES and MITSUI.
(i) Reason for Selecting MES as a party to which shares will be allotted
MES is a parent company of MODEC holding 50.1% of issued shares of MODEC, and MODEC has
accepted one (1) Director and two (2) Corporate Auditors from MES for the purpose of receiving
comprehensive advice on the management of the MODEC group. MODEC has selected MES as
the party to which the shares will be allotted, considering that it is important in terms of the business
operation of MODEC that MES maintains its ratio of stock holding even after the Capital Increase
Through the Third-Party Allotment so that MODEC and MES maintain the consolidated-8-

relationship.
(ii) Reason for Selecting MITSUI as a party to which shares will be allotted
MITSUI has been making investments etc., jointly with MODEC, to the special purpose companies
established by MODEC for the purpose of holding, leasing, operating and chartering FPSO etc., in
the lease, operation and charter business of FPSO etc., for oilfield development promoted by
MODEC. Given it is expected that the development and production activities of offshore oilfields
and gas fields in the deep sea area will continue to be active in the future and that the demand for
FPSO etc., will expand, it will become possible for MODEC to enhance its presence andcompetitiveness, being comparable to overseas contractors, by utilizing the management resources
and customer base, etc. of MITSUI. In addition, in recent years, the Charter Projects have been
growing in project size and the amount of funds required for the Charter Projects is drasticallyincreasing; therefore, it is necessary to strengthen the creditworthiness of the Charter Projects andthe fund raising capability from financial institutions, by enhancing the cooperative relationship in
the Charter Project with MITSUI through a business alliance with it. Therefore, as of today,
MODEC entered into the Business Alliance Agreement with MITSUI, concerning which an
explanation is given in “II. Business Alliance with MITSUI” below. MODEC judged that the best
way to improve its corporate value and shareholder value was to strengthen the cooperative
relationship with MITSUI, by allotting its shares by way of a third-party allotment to MITSUI,
which is very important in connection with our business strategy mentioned above.
(3) Policy of MES and MITSUI for Holding Shares of MODEC
Each of MES and MITSUI will hold the shares of MODEC for the medium- and long-term.
MODEC will execute a written confirmation with each of MES and MITSUI, which states that, (i) if
all or a part of the new shares to be allotted are assigned by MES or MITSUI within two years of theissuance of the new shares, a report on such assignment shall be made, in writing, to MODEC, and(ii) MES and MITSUI shall agree that the substance of the relevant report shall be reported by
MODEC to the Tokyo Stock Exchange, Inc. and that the substance of the relevant report shall bemade available to the general public.
(4) Details of Confirmation of Payment Capacity of MES and MITSUI in Respect of Payment for theThird-Party Allotment
MODEC received an explanation, from each of MES and MITSUI, which states that the payment forthe capital increase through the third-party allotment on this occasion, will be made from the cash on
hand. MODEC confirmed the results of operations and financial conditions described in the latest
Annual Securities Report and the latest Quarterly Report that were filed by each of MES andMITSUI, and has confirmed that each of MES and MITSUI has the sufficient assets for the payment
for the Capital Increase Through the Third-Party Allotment.
7. Major Shareholders and Their Shareholding Ratio after subscription
Before the subscription(as of June 30, 2009)
Mitsui Engineering & Shipbuilding
Co., Ltd.

After the subscription
50.10%-9-

Mitsui Engineering & Shipbuilding
Co., Ltd.

50.10%MITSUI & CO., LTD.

6.59%

MITSUI & CO., LTD.

14.99%

Japan Trustee Services Bank, Ltd.
(Trust Account 4G)

3.18%

Japan Trustee Services Bank, Ltd.
(Trust Account 4G)

2.56%

DnB NOR Bank ASA (Standing
proxy: Clearance Business
Department of The Bank ofTokyo-Mitsubishi UFJ,Ltd.)

2.67%

DnB NOR Bank ASA (Standing
proxy: Clearance Business
Department of The Bank ofTokyo-Mitsubishi UFJ,Ltd.)

2.15%

Japan Trustee Services Bank, Ltd.
(Trust Account)

2.21%

Japan Trustee Services Bank, Ltd.
(Trust Account)

1.78%

Trust & Custody Services Bank, Ltd.
(Pension Trust Account)

1.78%

Trust & Custody Services Bank, Ltd.
(Pension Trust Account)

1.43%

Master Trust Bank of Japan, Ltd.
(Trust Account)

1.65%

Master Trust Bank of Japan, Ltd.
(Trust Account)

1.32%

1.24%

The Chase Manhattan Bank, N.A.
London SL Omnibus Account(Standing proxy: Clearance Business
Department of the Mizuho Corporate
Bank, Ltd.)

1.00%

Euroclear Bank SA/NV (Standing
proxy: Clearance Business
Department of The Bank ofTokyo-Mitsubishi UFJ,Ltd.)

1.20%

Euroclear Bank SA/NV (Standing
proxy: Clearance Business
Department of The Bank ofTokyo-Mitsubishi UFJ,Ltd.)

0.97%

Sojitz Corporation

1.15%

Sojitz Corporation

0.92%

The Chase Manhattan Bank, N.A.
London SL Omnibus Account(Standing proxy: Clearance Business
Department of the Mizuho Corporate
Bank, Ltd.)

Notes: 1. The shareholding ratio before the subscription is based on the register of shareholders as of June 30, 2009.
2. The shareholding ratios concerning the trust business of the Japan Trustee Services Bank, Ltd. (Trust Account4G), the Japan Trustee Services Bank, Ltd. (Trust Account), the Trust & Custody Services Bank, Ltd.
(Pension Trust Account) and the Master Trust Bank of Japan, Ltd. (Trust Account), as of June 30, 2009, are
not described, because it is impossible for MODEC to gain reliable information on them.

8. Future Prospects
MODEC believes that the Capital Increase Through the Third-Party Allotment will have an
insignificant direct impact on the business results for the year ending on December 31, 2010. With
respect to the future prospects concerning the Business Alliance, please see “II. Business Alliancewith MITSUI 5. Future Prospects” below.
9. Matters concerning Procedures in the Code of Corporate Conduct
MODEC is not required to obtain the opinion of an independent third party or to confirm the intent
of each shareholder concerning the Capital Increase Through the Third-Party Allotment, as provided
for in Rule 432 of the Securities Listing Regulations by the Tokyo Stock Exchange, Inc. since (i) the
dilution rate of the Capital Increase Through the Third-Party Allotment is less than 25% and (ii) the
Capital Increase Through the Third-Party Allotment does not involve any change in the controllingshareholder.
10. Matters concerning Transaction with Controlling Shareholder etc.
The capital increase through the third-party allotment to MES in the Capital Increase Through theThird-Party Allotment, falls under the category of a transaction with the controlling shareholder, etc.
The situation as to how such capital increase through the third-party allotment is in compliance withthe “Guidelines concerning Protection of Minor Shareholders upon Transaction with Controlling- 10 -

Shareholders, etc.” which was stated in the corporate governance report disclosed by MODEC as of
May 15, 2009, is as follows:
At the Board of Directors’ Meeting of MODEC held on February 26, 2010, MODEC deliberated thesubstance and fairness of the capital increase through the third-party allotment to MES in the Capital
Increase Through the Third-Party Allotment, and, upon a resolution of the Board of Directors’Meeting of MODEC, decided the conditions of issuance to MES, pursuant to the “Standard of
Corporate Conduct for Compliance” of MODEC and in the same manner as with the decision in
respect of the conditions of issuance to MITSUI. Accordingly, the capital increase through thethird-party allotment to MES in the Capital Increase Through the Third-Party Allotment is incompliance with the above mentioned “Guidelines concerning Protection of Minor Shareholders
upon Transaction with Controlling Shareholder, etc.”(Note)“Guidelines concerning Protection of Minor Shareholders upon Transaction with
Controlling Shareholders, etc.” as appeared in the corporate governance report disclosed
by MODEC as of May 15, 2009, are as follows:

MODEC sets forth the provisions for conduct of fair transactions in the “Standards of Corporate
Conduct for Compliance,” and, even upon the transaction with MES, the parent company,
reasonably decides the price and terms of agreement, pursuant to these standards and in the samemanner as with the decisions in respect of transactions with ordinary business partners. In addition,
the compliance committee, which includes outside lawyers among its members and which is held
twice a year, confirms that no problems exists with respect to the compliance situation of the
MODEC group, including the conduct of fair transactions.

11. Business Results for and Equity Finance Executed in the Last Three Years(1) Consolidated Business Results for the Last Three Years(Million yen, unless otherwise specified)Year ended/As of December 31
2006
2007
2008
Consolidated net sales
99,149144,040
143,669
Consolidated operating profit

3,494

6,959

1,973

Consolidated ordinary income

4,664

7,828

2,529

Consolidated net income
Consolidated net income per share(yen)
Dividend per share (yen)Consolidated net assets per share
(yen)

3,305

4,499

1,357

88.37

120.28

36.30

12.50

15.00

17.50

1,092.01

1,153.39

993.70(2) Current Number of Issued Shares and Dilutive Shares
Number of shares- 11 -

Ratio to total number ofissued sharesTotal number of issued shares

37,408,000 shares(including treasury stock)100.0%

0 shares0.0%

Number of dilutive shares at current
conversion price (exercise price)
Number of dilutive shares at minimum
conversion price (exercise price)--

Number of dilutive shares at maximum
conversion price (exercise price)--(3) Recent Stock Prices(i) Stock Prices for the Last Three Years(In yen)Opening

Year ended/As of December 31
2008
2,890
2,895

High

5,070

4,190

2,050

Low

2,610

1,040

985

Closing

2,975

1,710

1,780

2007

2009
1,810

(ii) Stock Prices for the Last Six Months(In yen)December
1,660

2010
January
1,800

February
1,725

1,822

1,875

2,029

1,800

1,738

1,620

1,655

1,738

1,576

1,847

1,654

1,780

1,743

1,583

2009
September
1,840

October
1,866

November
1,758

High

2,050

2,020

Low

1,813

Closing

1,836

Opening

Note:

The stock prices in February 2010 are the stock prices as of February 25, 2010.

(iii) Stock Price on the Business Day Immediately Preceding the Date of the Resolution Authorizing
the Issuance(In yen)February 25, 2010
Opening
1,667
High

1,668

Low

1,576

Closing

1,583(4) Equity Finance in the Last Three Years
Not applicable
12. Terms and Conditions of Issuance(1) Terms and conditions of issuance for the capital increase through the third-party allotment to MES- 12 -

in the Capital Increase Through the Third-Party Allotment(i) Type/Number of Shares:
common stock 4,509,000 shares(ii) Amount to be paid:
1,732 yen per share(iii) Total amount of issue price:
7,809,588,000 yen.
(iv) Amount of Stated Capital and Additional Paid-in Capital to be increased:
Both the amount of stated capital and amount of the additional paid-in capital to be increased
are 3,904,794,000 yen(v) Method of Subscription or Allotment:
Issuance of new shares through third-party allotment(vi) Subscription Date:
Tuesday, April 6, 2010(vii) Payment Date:
Tuesday, April 6, 2010(viii) Each of the items above shall be subject to the effectiveness of the securities registration
statement filed under the Financial Instruments and Exchange Act of Japan.
(2) Terms and conditions of issuance for the capital increase through the third-party allotment to
MITSUI in the Capital Increase Through the Third-Party Allotment(i) Type/Number of Sharescommon stock 4,491,000 shares(ii) Amount to be paid:
1,732 yen per share(iii) Total amount of issue price:
7,778,412,000 yen.
(iv) Amount of Stated Capital and Additional Paid-in Capital to be increased:
Both the amount of stated capital and amount of the additional paid-in capital to be increased
are 3,889,206,000 yen(v) Method of Subscription or Allotment:
Issuance of new shares through third-party allotment(vi) Subscription Date:
Tuesday, April 6, 2010(vii) Payment Date:
Tuesday, April 6, 2010(viii) Each of the items above shall be subject to the effectiveness of the securities registration
statement filed under the Financial Instruments and Exchange Act of Japan.
II. Business Alliance with MITSUI
1. Reason for the Business Alliance
MITSUI has made equity contributions, etc., jointly with MODEC, to the special purpose companies
established by MODEC for the purpose of holding, leasing, operating and chartering FPSO, etc. in
the lease, operation and charter business of FPSO, etc. for oilfield development promoted by
MODEC. Given the expectation that the development and production activities of offshore
oilfields and gas fields in the deep sea area will continue to be active in the future and that thedemand for FPSO, etc. will expand, by utilizing the management resources and customer base, etc.
of MITSUI, it will become possible for MODEC to enhance its presence and competitiveness, being
comparable to overseas contractors. In addition, in recent years, the Charter Projects have been
growing in project size and the amount of funds required for the Charter Projects is drasticallyincreasing. It is necessary for MODEC to strengthen the creditworthiness of the Charter Projects
and the fund raising capability from financial institutions, by enhancing the cooperative relationshipin the Charter Project with MITSUI through a business alliance with it. As mentioned so far, thepurpose of the Business Alliance is to improve the corporate value of MODEC and MITSUI throughthe enhancement of the competitiveness of MODEC and through the continuous endeavor to enter- 13 -

into contracts for new projects.
2. Details of the Business Alliance, etc.
(1) Details of the Business AllianceWith respect to the details of the business alliance, MODEC and MITSUI will position themselves
as each other’s strategic partner and by mutually utilizing the management resources, know-how,brand and customer base, etc., will jointly promote the FPSO, etc. related business. In particular, it
is expected that the following items will be conducted, upon mutual consultations regarding thedetails thereof, such as the content, conditions, and timing. Either of MODEC and MITSUI may
terminate the Business Alliance if MITSUI fails to conduct the payment for the Capital Increase
Through the Third-Party Allotment, by April 6, 2010.
・・・・

Provision, by MODEC, of the know-how as to the engineering, construction, lease and operation,etc. of FPSO, etc.;
Provision, by MITSUI, of its global network, and of the know-how as to the businessdevelopment, financing and characteristics of each region;
Assistance, by MITSUI, in enhancing MODEC’s system concerning business operation;
Support, by MITSUI, with respect to the human resources of MODEC.

(2) Number of shares to be newly acquired by MITSUI, and ratio to number of issued shares
MITSUI will subscribe for 4,491,000 shares of the common stock to be issued by MODEC, by wayof the Capital Increase Through the Third-Party Allotment. MITSUI is expected, as a result of such
subscription, to hold common stocks accounting for 14.99% of the total number of issued shares,
after the Capital Increase Through the Third-Party Allotment, of MODEC.
3. Outline of MITSUI
Please see the part for MITSUI in “I. Issuance of New Shares Through Third-Party Allotment 6.
Reasons for Selecting MES and MITSUI, and Other Related Matters (1) Outline of MES andMITSUI” above.
4. Schedule(i) Board of Directors’ Meeting(ii) Execution of Business Alliance Agreement

Friday, February 26, 2010
Friday, February 26, 2010

5. Future Prospects
Although MODEC believes that the Business Alliance will have an insignificant direct impact on thebusiness results for the year ending on December 31, 2010, further enhancement of competitivenessof MODEC is expected through the Business Alliance.
In addition, it is expected that each item regarding the Business Alliance will be conducted, upon
consultations with MITSUI as to the details thereof, such as the content, conditions, and timing.
With respect to the future prospects concerning the Capital Increase Through the Third-Party
Allotment, please see “I. Issuance of New Shares Through Third-Party Allotment 8. Future
Prospects” above.
III. (Expected) Change in Major Shareholders- 14 -

1. Reason for change
MITSUI’s holding ratio of voting rights of MODEC is expected to be 14.99%, as a result of theCapital Increase Through the Third-Party Allotment, and accordingly, MITSUI is expected to
become a major shareholder of MODEC.
2. Outline of shareholder to be changed
Please see the part for MITSUI in “I. Issuance of New Shares Through Third-Party Allotment 6.
Reasons for Selecting MES and MITSUI, and Other Related Matters (1) Outline of MES andMITSUI” above
3. Number of shares held (number of voting rights) by relevant shareholder and ratio to total number ofvoting rights of shareholders

Number of voting rights(Number of shares held)

Ratio to total number ofvoting rights ofshareholders ※Rank in major
shareholders

Before Change(As of June 30,
2009)

24,665 units(2,466,500 shares)

6.59%

SecondAfter Change

69,575 units(6,957,500 shares)

14.99%

Second※ The number of shares without voting rights that is deducted from the total number
of issued shares:
4,100 shares
Total number of issued shares as of June 30, 2010:
37,408,000 shares
4. Future Prospects
The above mentioned change in major shareholders will have no impact on the business results forthe year ending on December 31, 2010. With respect to the future prospects concerning the Capital
Increase Through the Third-Party Allotment and the Business Alliance, respectively please see “I.
Issuance of New Shares Through Third-Party Allotment 8. Future Prospects” and “II. Business
Alliance with MITSUI 5. Future Prospects” above.

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