ETIC to Provide Support to Okiso Construction Co., Ltd. and the related company
April 28th, 2011
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”) has decided to provide
support to Okiso Construction 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 companies concerned
Okiso Construction Co., Ltd. and Kenso Co., Ltd. (hereafter the “Okiso Companies”)
2. Name of the financial institution jointly applying for rehabilitation support with the Okiso
Companies
The Bank of Okinawa, Ltd. (hereafter “Bank of Okinawa”)
3. Outline of business revitalization plan
Please see appendix
4. Comments from State Ministers in charge of ETIC
Prime Minister, Minister of Internal Affairs and Communications, Minister of Finance,
Minister of Economy, Trade and Industry: No opinion expressed
Minister of Health, Labour and Welfare: “I have no objection to the decision to support
the Okiso Companies. However, I ask that after reaching the decision to support, ETIC
should encourage Okiso to discuss the situation with employees as soon as possible. I
also ask that in advising on and guiding the implementation of the corporate
revitalization plan, ETIC should aim to ensure that the Okiso Companies comply withrelated laws and regulations, and that they also provide adequate opportunities for
substantive discussions with the workforce with due consideration of employment
stability and other such factors.”
5. Comment from State Minister supervising business activities
Minister of Land, Infrastructure and Transport: No opinion expressed
6. Debt purchase application period
From Thursday, April 28th, 2011 for receipt by ETIC no later than Friday, July 15th, 2011
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7. Request for temporary suspension
Under Article 27, Clause 1 of the ETIC Act, financial institutions have been requested
not to recover loans or exercise any other rights they may have as creditors before theend of the debt purchase period as per item 6 above.
8. Treatment of trade and general creditors
The decision by ETIC to provide support involves requesting financial support only fromfinancial institutions providing loans to the Okiso Companies. No request for support will
be made with regard to trade debt. Therefore there will be no impact on trade andgeneral creditors.
9. Basis for decision to support
ETIC‟s basis for deciding to provide support is as follows.
9.1 Rationale
Over the past 30 years since being established in 1982, the Okiso Companies haveoperated an apartment and detached housing construction business, a rental
property management business, and a real estate rental business mainly in Okinawa
Prefecture. The apartment and detached housing construction businesses have aconstruction track record of 500 rental apartment buildings and 1,300 detachedhouses. Furthermore, the rental property management business holds contracts withrental apartment owners for the management of a total of 4,200 apartments, andboasts the largest business scale among similar companies that base their main
headquarters in Okinawa Prefecture. The Okiso Companies also possess one of the
few precast productions factories in Okinawa Prefecture. Using the concrete walls
produced at this factory, the Okiso Companies are able to construct buildings at aconsistent level of quality, at a lower cost and in a shorter time than using traditional
manufacturing methods, and this capability is rated highly by rental apartment owners
and their tenants.
The Okiso Companies have developed a strong competitive advantage based on theeffective management resources noted above, and maintain a certain degree of
profitability in each of their businesses.
Looking at the macro environment, housing demand in Okinawa Prefecture is2expected to gradually increase. Moreover, based on data, including the ratio of rental
housing starts in relation to the population and the growth rate in housing starts,
Okinawa continues to be a highly attractive market.
In the event of the collapse of the Okiso Companies, liabilities owed to apartment
owners pertaining to large sums of money deposited with the Okiso Companies forrent and security deposits would be lost, rental management operations contracted to
the Okiso Companies would be greatly disrupted, and ultimately a significant impact
on the lives of the rental apartment owners and their tenants would be unavoidable.
While the Okiso Companies employ 74 staff (as of January 31 st, 2011). Taking into
consideration the employees of the numerous partner companies (building
contractors, raw material supply contractors, etc.), employment numbers associatedwith the Okiso Companies is substantial. In the event of the collapse of the Okiso
Companies, there would be significant impact on the employment of a large numberof people, causing widespread effect on the community of Okinawa—an area inwhich employment opportunities are not abundant.
Accordingly, ETIC has determined that there is ample merit in supporting therevitalization of the Okiso Companies as a means of preventing disturbances to thelives of rental apartment owners and their tenants, and contributing to the stableprovision of their lifestyle fundamentals. Moreover, ETIC believes that successfully
undertaking this support program will ensure the stable employment of staff of the
Okiso Companies, and also contribute to stability in the local economy.

9.2 Role of ETICIn deciding to support the Okiso Companies, ETIC‟s planned role is as follows:(1) Act as a coordinator among the financial institutions involved(2) Supply outside management personnel
With regard to (1) above, ETIC will pursue the smooth progress of the revitalization plan,by coordinating activities which the Okiso Companies would have found difficult toexecute independently, including reconciling the interests of the related financial
institutions, sponsors, and other related parties from a fair and neutral standpoint. With
regard to (2), ETIC will place outside management personnel in the Succeeding
Company after the company separation, thereby supporting the business revitalization3

process. ETIC will not provide the Okiso Companies with financing or a capital injection.
9.3 Transfer of COM CITY
The execution of the business revitalization plan of the Okiso Companies is subject tothe precondition that COM CITY (3-2374 Kurosaki, Yahatanishi-ku, Kita-Kyushu City.) istransferred to Kita-Kyushu City in early July 2011. Accordingly, ETIC‟s decision toprovide support is subject to the abovementioned transfer.
After the abovementioned transfer is confirmed to have been completed as planned inearly July 2011, a decision on the purchase of debt will be made by ETIC (under article
31, Clause 1, and Article 28 Clause 1 of the ETIC Act).

ENDS

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Appendix: Outline of the Business Revitalization Plan
Section 1: Overview of the companies receiving support
1.1 Name of company
Okiso Construction Co., Ltd. (hereafter “Okiso”)
Kenso Co., Ltd. (hereafter “Kenso”)(Collectively, “the Okiso Companies”)
1.2 Affiliated companies
Asakawa Kenchiku Sekkei Kozo Jimusho Co., Ltd., (hereafter “Succeeding
Company”)
1.3 Head office
Okiso: 180-7 Aza-Mekaru Naha-shi Okinawa
Kenso: 5192-24 Katsurenhaebaru, Uruma-shi, Okinawa
Succeeding company: 5192-24 Katsurenhaebaru, Uruma-shi, Okinawa
1.4 Main businessOkiso: Apartment construction business, housing construction business, rental
property management business, real estate rental business, etc.
Kenso: Real estate rental business
1.5 Number of employees
Okiso:
Full-time employees:

67 (including 5 seconded to the Succeeding Company)

Employees received
on secondment:

1Part time employees:

2

Kenso:
Full-time employees:

4

1.6 Main banks
The Bank of Okinawa, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Okinawa Development Finance Corporation
Resona Bank, Limited.
Bank of The Ryukyus, Limited.
The Bank of Fukuoka, Ltd.
The Eighteenth Bank, Limited
Orix Corporation
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The Shoko Chukin Bank, Ltd.
The Daido Fire and Marine Insurance Co., Ltd.
Okinawa Prefectural Agricultural Cooperatives
Okinawa Credit Guarantee Corporations
Housing Improvement and Development Public Corporation Foundation
1.7 Financial overview (financial results for the year ended June 30, 2010)
Okiso: Net sales ¥5,595 million; operating income ¥174 million
Kenso: Net sales ¥1,412 million; operating income ¥126 million

Section 2: Background and circumstances leading to request for ETIC support
Since being established in 1982, the Okiso Companies have been operating an apartment
and detached housing construction business, a rental property management business, anda real estate rental business in Okinawa Prefecture. In recent years they have actively
worked to expand outside Okinawa Prefecture, including opening a Fukuoka Branch in 2000,
and a Tokyo Branch in 2003. Reflecting the business environment at the time, particularly inTokyo, their real estate-focused business was successful and contributed to businessperformance. However, the global financial crisis, symbolized by the collapse of Lehman
Brothers in September 2008, caused Japan‟s real estate market to stagnant. As a result, theOkiso Companies were forced to sell their real estate assets at discounted prices, which
resulted in substantial losses.
With regard to COM CITY, a retail facility in Kita-Kyushu City acquired in September 2007,
as the real estate market continued to plunge, the Okiso Companies faced difficulties inachieving a sale of the facility at their initially forecast price. Continuing to hold the facility
caused substantial losses as they faced high costs for property tax, management fees andother costs, and dwindling rental income.
While the Okiso Companies maintain a certain degree of profitability with regard to theirapartment construction business, detached housing construction business, rental property
management business, and their rental real estate business in Okinawa, the transfer of
COM CITY is a matter that must be urgently addressed in order to ensure the continuanceof these businesses. On April 15th 2011, the Okiso Companies formed a preliminary saleagreement with Kita-Kyushu City. Accordingly, with the transfer of COM CITY in sight, theOkiso Companies resolved to apply for support from ETIC

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Section 3: Outline of business revitalization plan
1. Business plan
Business operations of the Okiso Companies are separated into core businesses andnon-core businesses as follows. The Succeeding Company will receive and continue
the core business operations of the Okiso Companies through a company separation(absorption separation) using the second company method.
(1) Core business operations (continuing businesses)
Apartment construction business, detached housing construction business, rental
property business and real estate rental business inside Okinawa are positioned ascore businesses operations, and will be continued by the Succeeding Company.
(2) Non-core business operations (businesses subject to withdrawal)
Okiso will withdraw from its condominium construction and sales business, andits real estate rental and real estate sales businesses outside Okinawa.
2. Request for financial support from the financial institutions, etc.
Of the ¥6.4 billion owed to financial institutions and others by the Okiso Companies(current estimated figure) financial support (effectively, debt forgiveness) will be
requested for ¥4.0 billion. (Note: The amount of financial support is based on a
calculation of the disposal value of non-operations-related real estate that the
Succeeding Company will not take over. The final amount of financial support willchange, as the amount of loan repayment is linked to the achieved real estate disposal
values.)3. Financing
Under the plan, financing of debt repayment and other funds required for thecontinuing business will be provided by a capital injection and income from businesses
based in Okinawa Prefecture (Okinawa Syarring Co., Ltd., Kyuyo Cement Co., Ltd.,
Kaicon Co., Ltd., The Bank of Okinawa, Ltd., The Okigin General Lease Co., Ltd.,
Ogikin SPO Co., Ltd., and others). Moreover, in preparation for unforeseen
circumstances, a new facility will be established for from the Bank of Okinawa, Ltd.
4. Transfer of COM CITYThis plan is subject to the precondition that COM CITY will be transferred to the City ofKita-Kyushu in late July 2011.
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Section 4. Conformance with standards for support
1. Requirements related to standards of support
1.1 Possession of effective management resources
For nearly 30 years since being established in 1982, the Okiso Companies haveoperated an apartment and detached housing construction business in Okinawa
Prefecture, and created a construction track record of 500 apartment buildings forrental and 1,300 individual houses (as of January 31st, 2011). Furthermore, in therental property management business, the Okiso Companies are contracted by rental
apartment owners for the management of a total of 4,200 apartments, and boast thelargest business scale among similar companies that base their main headquarters in
Okinawa Prefecture. The Okiso Companies also possess one of the few precast
productions plants in Okinawa Prefecture and employ over 70 people, as such
possessing effective management resources.
1.2 Excessive indebtedness
The Okiso Companies carry an excessive amount compared to revenues. Financial
support is essential to the revitalization of the Okiso Companies.
2. Factors confirming potential for business revitalization
2.1 Agreement of main creditors
The Okiso Companies made a joint application for support with core creditor the Bankof Okinawa, Ltd.
2.2 Standards for productivity improvement
The required standards for productivity improvement are expected to be met throughthe implementation of this business revitalization plan.
2.3 Standards for financial soundness
The required standards for financial soundness are expected to be met through theimplementation of this business revitalization plan.
2.4 Comparison with liquidation value
The value of the Okiso Companies‟ debt upon implementation of the business
revitalization plan is estimated to be more than the value available throughliquidation.
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3. Potential to refinance and for sale of shares within three years
Implementation of the business revitalization plan is expected to significantly improve
the financial condition of the Okiso Companies, enabling a steady a level of cash flow,
and making refinancing and the sale of ETIC‟s shares highly possible.
4. Connection with structural oversupply
Implementation of the business revitalization plan will not increase the supply capacity of
the Okiso Companies (the Succeeding Company). Accordingly, the plan has been
judged as „not hindering the resolution of structural oversupply‟ with reference to Article
19 of the Act on Special Measures for Industrial Revitalization and Industrial Innovation.
5. Status of consultations with unions
Because there is no labor union at the Okiso Companies it is planned that following thedecision to provide support, meetings with employees will be promptly scheduled as partof the revitalization process to explain the main points of the business revitalization plan,and consult on employment and working conditions.
Section 5: Responsibility of management
To reflect the responsibility of the management team for the current predicament of the
Okiso Companies, president Keibun Yokota will have no role in the management of the
Succeeding Company, but will be involved with the revitalization of the company as anadvisor.
Section 6: Responsibility of shareholders
After the company separation, the new company will sell the non-operations-related realestate assets, and following the sale will promptly apply to begin special liquidation
proceedings. No allocation of remaining assets will be made to shareholders in the course of
these proceedings
ENDS

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