ETIC to Provide Support to Shibamasa Kanko Co., Ltd.
March 3rd, 2011
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”), has decided toprovide support to Shibamasa Kanko Co., Ltd. under Article 25, Clause 4 of theEnterprise Turnaround Initiative Corporation of Japan Act (Act 63, of 2009, hereafter “theETIC Act”).
1. Name(s) of persons or companies concerned
Shibamasa Kanko Co., Ltd. (hereafter “Shibamasa Kanko”)
2. Name(s) of financial institutions jointly applying for rehabilitation support with
Shibamasa Kanko
The Fukui Bank, Ltd.
3. Outline of business revitalization plan
Please see appendix.
4. Comments 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: “I have no objection to the decision to support
Shibamasa Kanko. However, I ask that after reaching the decision to support, ETIC
should encourage Shibamasa Kanko to discuss the situation with employees of thecompany as soon as possible. I also ask that in advising on and guiding theimplementation of the corporate revitalization plan, ETIC should aim to ensure that
Shibamasa Kanko complies with related laws and regulations, and that Shibamasa
Kanko also provides adequate opportunities for substantive discussions with theworkforce with due consideration of employment stability and other such factors.”
5. Comment from state minister supervising business activities
Minister of Economy, Trade and Industry: No opinion expressed.
6. Debt purchase application period
From Thursday, March 3rd, 2011 for receipt by ETIC no later than Wednesday, March
23rd, 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 creditors
The decision by ETIC to provide support involves requesting the waiver of debt only
from financial institutions providing loans to Shibamasa Kanko. No request for support
will be made with regard to trade debt. Therefore there will be no impact on tradecreditors.
9. Basis for decision to support
ETIC’s basis for deciding to provide support is as follows.
9.1 Rationale
Shibamasa Kanko operates Shibamasa World, a leisure park facility centered on aswimming pool that operates during summer. Shibamasa World is one of the leading
leisure facilities in the Hokuriku (northern Japan) area, attracting more than 300,000
visitors per year. The majority of these visitors are from outside the prefecture, which isevidence of the facility’s appeal. Shibamasa Kanko, in operating a facility with such wide
appeal to people both within and outside of the region, has over the course of many
years contributed to the vitality of the regional economy. In addition to the pool,
Shibamasa World incorporates a large lawn area of approximately 620,000m2, and by
hosting a variety of events and activities that make use of this lawn outside of thesummer pool season, Shibamasa Kanko contributes to the efforts of the regional tourism
industry to attract longer-stay visitors to the region’s other tourist attractions andlodgings.
Shibamasa Kanko also contributes to regional society through initiatives such as
opening its lawn areas widely to the public, supporting the regional community andserving as a site that facilitates social education.
Accordingly, ETIC has determined that there is ample merit in supporting Shibamasa
Kanko as a means of contributing to the development of the regional economy, as wellas contributing to regional society.

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9.2 Role of ETICIn deciding to support Shibamasa Kanko, ETIC’s planned role is as follows:(1) Act as a coordinator among the financial institutions involved(2) Implement a capital injection of ¥10 million(3) Provide new financing of ¥165 million(4) Supply management personnel.
With regard to (1) above, ETIC will reduce excessive interest-bearing debt and improve
the financial condition of Shibamasa Kanko by requesting debt forgiveness fromfinancial institutional creditors. Concomitant with requests from relevant financial
institutions for debt purchase, ETIC also plans to purchase debt of Shibamasa Kanko.
With regard to (2) and (3), ETIC will provide the support necessary to properly revitalize
Shibamasa Kanko’s operations, implementing a company separation (absorption
separation) of Shibamasa Kanko and forming a new company containing its continuing
operations, underwriting ordinary shares in the new company and providing some of thefunding necessary for large-scale refurbishment of facilities. With regard to (4), ETIC willplace management staff within the new company to strengthen its management, while
supporting Shibamasa Kanko in the establishment of a stable management structure.
Ends

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Appendix: Outline of the Business Revitalization Plan
Section 1: Overview of the companies receiving support
1.1 Names of companies
Shibamasa Kanko Co., Ltd.
1.2 Head office
Hamaji 45-1, Mikuni-cho, Sakai-shi, Fukui Prefecture
1.3 Date of establishment
May 1, 1973
1.4 Capital¥25,000,000
1.5 Shares
Total number of shares authorized:

64,000 shares

Total number of shares issued and outstanding:

50,000 shares

1.6 Main shareholders
Name

Position

Number of shares

Percentage of total

Masato Maekawa

President

31, 800 shares

63.6%

1.7 Main business
Operation of the Shibamasa World amusement facility
1.8 Number of employees
30 (as of end December 2010)
1.9 Main business locations
Head office (Sakai City, Fukui Prefecture
1.10

Main bank
The Fukui Bank, Ltd. (“Fukui Bank”)

1.11

Affiliated companies

Japan Entertainment Limited (“Japan Entertainment”); Shibamasa Co, Ltd.
(“Shibamasa”); Shibamasa Noen Limited (“Shibamasa Noen”)
1.12

Financial overview (results for year ended April 30, 2010)
Sales
Operating loss

¥1,236,660,000(¥44,980,000)

Net assets(¥5,687,530,000)

Total assets¥7,536,750,000

4Section 2: Background and circumstances leading to request for ETIC support
Shibamasa Kanko was established as a business managing tourism-related facilities,
restaurants, and other such operations. In 1980 the company opened its Jumbo Pool,and shifted the focus of its business activities to the administration of large public leisurefacilities. Expanding on its Jumbo Pool leisure center, the company strengthened its
appeal to customers inside and outside the prefecture by opening a succession of new
operations, including a museum, the Shibamasa Art Rest House, an adventure slider, amini golf course, an ice skating rink and a heated indoor pool. Visitor numbers
exceeded one million in the year to April 1991, and sales in the following year exceeded¥4 billion as performance continued an upward trend. During this process the facilities
hosted by Shibamasa Kanko became one of northern Japan’s major leisure draw cards,
capable of attracting visitors from neighboring and central regions of Japan.
However, with the collapse of Japan’s economic bubble, consumption of leisureactivities stagnated, and attendance at Shibamasa World declined suddenly. Between
the fiscal years ended April 1992 and April 2000, sales fell steeply to around one-third of
the April 1992 peak, and interest-bearing debt procured from financial institutions tofund facilities construction was placing a crippling strain on the company’s financial
position.
In 1997, Shibamasa Kanko received deferment of principle payments and otherfinancial support from Fukui Bank, and in the same year limits were placed on large-scale
capital expenditure and also on repairs and maintenance. From 2003 until the present,
Shibamasa Kanko has had principal payments halted and received other such financial
support from financial institutions. Despite this, the company’s situation has not improved,
andit was determined that comprehensive business revitalization would be difficult if
excessive level of debt relative to revenue generating capacity continues.
Accordingly, Shibamasa Kanko, after discussions with Fukui Bank, resolved to apply forsupport from ETIC, and with the support of ETIC, undertake a comprehensive reform of
the business, aiming to minimize damage to enterprise value while adopting transparent,
fair procedures to ensure proper due process.
Section 3: Outline of business revitalization plan
1. Business plan
(1) Basic policy
As outlined above, the primary cause of Shibamasa Kanko’s financial distress is

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excessive capital investment, leading to an excessive debt burden relative torevenue-generating capacity. The first step will therefore be to dispose of assets thatare not currently contributing to operations, while limiting expenditures on a rational
basis through strategic control of capital expenditure and maintenance expenses.
(Policy 1)
Further, Shibamasa Kanko does not have a system in place to regularly collect andanalyze customer data. This kind of data is a critical management resource, necessary
for decisions on marketing policy (including pricing and customer targeting) and capital
expenditure planning (see Section 2 above, Background and circumstances leading torequest for ETIC support), and the company currently lacks a management culture inwhich data analysis is used as the basis for strategic decision-making. Accordingly, asystem will be constructed to enable the collection and analysis of the data andcustomer feedback necessary for efficient management decision-making. Previous
errors in sales strategy will be fundamentally revised, as a means of maintaining andgrowing customer numbers throughout the year. (Policy 2)
In addition, Shibamasa Kanko has until now not collaborated sufficiently withneighboring tourist regions and tourism operators in its sales activities, and is lagging
behind in joining regional cooperative initiatives developed in recent years. Accordingly,
based on the strong regional customer appeal of its summer season business,
Shibamasa Kanko will serve as a leading company in a unified regional approach totourist revitalization, while for periods outside of the core summer season will
strengthen regional collaboration in pursuit of the ‘long-stay’ tourists targeted byneighboring tourist attractions and accommodation providers. (Policy 3)(2) Main initiatives
2.1 Strategically control capital expenditure and maintenance expenses
A. Dispose of non-operating assets
In order to eradicate the excessive capital investment that was the direct cause of thecurrent over-indebtedness sale or disposal of non-operating assets such as real estateoutside of the amusement park and the sale of art items in the closed museum will be
implemented.
B. Invest at an appropriate level and rigorously review expense cost-effectivenessAppropriate levels of CAPEX and maintenance expenses will be assessed inaccordance with cash flow in each period and expenditure will be ranked andprioritized in accordance with a rigorous review of cost-effectiveness6

C. Withdraw from non-profitable attractions
Attractions will be assessed by previous performance, and if it is determinedthat closing certain attractions will contribute to earnings more than investing large
amounts in their refurbishment, such attractions will be operated only up until the
point major investment is necessary and then closed without further investment.
2.2 Increase year-round customer appeal and review sales strategy
A. Adopt a flexible approach to pool operating hours
To date, pool operating hours have been managed on a fixed basis. This will be
reviewed so that operating hours are adjusted flexibly according to demand, while
also taking into account weather conditions in each year.
B. Recommence group travel sales through travel agencies
Given the merits of increasing visitor numbers and increasing ticket sales, food &beverage sales, and retail sales in a fixed-cost business such as Shibamasa Kanko,group sales through travel agency introductions, which are currently suspended, will
be resumed.
C. Strengthen data-based management
As a basis for implementing the strategies outlined in A and B above, a structure
will be installed to enable the relevant and timely collection and analysis ofmanagement data.
2.3 Construct a system for regional cooperation
A. Leverage strong summer customer appeal as a regional resource
Shibamasa Kanko’s powerful capacity to attract tourists to the region during thesummer season will be leveraged as a starting point for proactive promotions
undertaken in collaboration with local tourist attractions and accommodation
facilities, with Shibamasa Kanko taking the lead in developing a unified joint
promotion plan for the region.
B. Contribute to success of the region as a ‘long stay’ destination
By promoting Shibamasa Kanko’s ability to attract visitors to events outside thecore summer pool operating season, Shibamasa Kanko will contribute to theappeal of the region as a long stay destination, in line with the aims of local
tourist attraction operators and accommodation providers.
C. Contribute to the regional community and to social education
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Shibamasa Kanko will also contribute to regional society through diverse
initiatives such as opening its extensive lawn areas to the public, supporting theregional community and serving as a site that facilitates social education througha range of experiences and activities.

2. Business restructuring
㩷 (1) Affiliated subsidiaries
Japan Entertainment will promptly be liquidated. It is planned that Shibamasa andShimbamasa Noen will promptly commence special liquidation proceedings after thetransfer to the new continuing company (defined in next section) of assets necessary
for the ongoing operation of the business.
㩷 㩷 (2) Company separation
Shibamasa Kanko will establish a 100% owned subsidiary (hereafter, “the New
Company”) and after transferring all shares of the new company to ETIC, will
implement a company separation (absorption separation) wherein all the assets andliabilities pertaining to its operations of Shimamasa World, along with its related food& beverage and retail sales operations, are transferred to the New Company forcontinued operation (second company method). After the company separation,
Shibamasa Kanko (hereafter, “the Old Company”) will apply to be wound up under
special liquidation proceedings. In addition, in order to provide partial funding forlarge-scale maintenance, refurbishment and other such expenses, the New
Company will issue ¥10 million of new ordinary shares, which will be underwritten byETIC.
㩷 㩷 (3) Request for financial support from financial institutions, etc.
Of the approximately ¥12.87 billion owed to financial institutions, financial support
will be requested for approximately ¥12.327billion. (Note: The above amount ofrequested financial support is based on the estimated value of non-operating realestate and other such assets. Because the asset disposal linked method is being
used for debt repayment, the final amount of financial support will change.)(4) Financing
Based on the capital injection to be provided by ETIC as noted above, in addition to
the new financing to be provided by ETIC and Fukui Bank, it is deemed that the New
Company will not be at risk of funding insufficiency.
8(5) Quantitative plan
For the fiscal year starting April 1, 2014, sales at the New Company are estimated to
be lower than current sales, while securing ordinary income of approximately ¥48
million.
Section 4: Conformance with standards for support

1. Possession of effective management resources
Shibamasa Kanko operates Shibamasa World, a leisure park facility centered on aswimming pool that operates during summer. Shibamasa World is one of the leading
leisure facilities in the Hokuriku (northern Japan) area, attracting more than 300,000
customers per year. The majority of these visitors are from outside the prefecture,
which is evidence of the facility’s appeal, and over the course of many years
Shibamasa Kanko has contributed to the vitality of the regional economy. In addition to
the pool, Shibamasa World incorporates a large lawn area of approximately 620,000m2,
and by publicizing and hosting a variety of experiences that make use of this lawnoutside of the summer pool season, Shibamasa Kanko contributes to the efforts of theregional tourism industry to attract long stay visitors to the region’s tourist attractions
and lodgings. Shibamasa Kanko also contributes to regional society through initiatives
such as opening its lawn areas widely to the public, supporting the regional communityand serving as a site that facilitates social education.
2. Excessive indebtedness
Shibamasa Kanko carries total debt of approximately ¥12.87 billion, an excessive
amount compared to its revenues. Debt forgiveness and financial support are essential
to the revitalization of the business.
3. Items supporting prospect of revitalization
3.1 Agreement of main creditors
The application by Shibamasa Kanko was made jointly with Toho Bank.
3.2 Standards for productivity improvement
In line with ETIC’s proscribed standards, successful implementation of this business
revitalization plan is expected to increase ROE by at least two percentage points, andincrease the tangible fixed asset turnover ratio by at least five percentage points.
3.3 Standards for financial soundness9Through implementation of this business revitalization plan, the ratio ofinterest-bearing debt to cash flow is expected to be within ten times, and current
revenues are expected to be greater than current expenses.
4. Comparison with liquidation value
The value of Shibamasa Kanko’s debt through implementation of the business
revitalization plan is estimated to be greater than the value available through recovery
on liquidation.
5. Potential to refinance within three years
Implementation of the business revitalization plan is expected to significantly improve
the financial condition of Shibamasa Kanko and establish stable cash flows, making
refinancing highly possible.
6. Connection with structural oversupply
Implementation of the business revitalization plan will not increase the supply capacityof Shibamasa Kanko. Accordingly, the plan has been judged as ‘not hindering theresolution of structural oversupply’ with reference to Article 19 of the Act on Special
Measures for Industrial Revitalization and Industrial Innovation.
7. Status of consultations with workforce
Although there is no labor union connected with Shibamasa Kanko, it is planned that
explanatory meetings with employees will be scheduled promptly after
announcement of the decision by ETIC to provide support.
Section 5: Responsibility of managers
The responsibility of the management team of Shibamasa Kanko for its financial
predicament will be reflected in the resignation of the entire management team, without
directors’ retirement benefits and without reappointment to the New Company.
Section 6: Responsibility of shareholders
Reflecting the responsibility of shareholders, in the special liquidation of the Old Company
after the company separation the shareholders of the Old Company will not receive any
distribution of remaining assets, and as a result their shares will be eliminated.
ENDS

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