ETIC to Provide Support to Aizu Bus Co., Ltd.
December 2nd, 2010
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”) has decided to provide
support to Aizu Bus 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(s) of persons or companies concerned
Aizu Bus Co., Ltd. (hereafter, “Aizu Bus”), Aizu Bus Kanko ATS Co., Ltd., Aizu Bus Auto
Service Co., Ltd. (collectively, the “Aizu Bus Companies”)
2. Name(s) of financial institutions jointly applying for rehabilitation support with the Aizu
Bus Companies
The Toho Bank, Ltd. (hereafter “Toho Bank”)
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 transaction. However,I ask that after reaching the decision to support, ETIC should encourage Aizu Bus todiscuss the situation with employees of the company as soon as possible. I also ask thatin advising on and guiding the implementation of the corporate revitalization plan, ETIC
should aim to ensure that Aizu Bus complies with related laws and regulations, and that
Aizu Bus 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 Land, Infrastructure and Transport: “Passenger bus services play a role insupporting the lives of the local population, so it is important to be able to maintain thenecessary transportation network within the region. I ask that due consideration be1

given to this point when implementing the business revitalization. In particular, wheninvestigating the elimination or adjustment of passenger bus routes, I ask that theparties concerned make use of regional councils and other such forums, and that
adequate opportunities are provided for discussions with regional stakeholders withregard to maintaining and securing the life line transportation infrastructure.
With regard to taxi services, the Aizu Transportation Zone was designated as aSpecified Area* on October 1, 2009, and regional stakeholders have been taking steps
to reduce an oversupply of taxis. However, given that taxi oversupply remains an issue,
in implementing the business revitalization plan I ask that consideration be given to anymeans by which taxi oversupply in the region can be eliminated or improved as much as
the situation permits..”*Under the “Special Ordinance on Optimization and Revitalization of Regular Passenger Vehicle
Transportation Services in Specified Areas” enacted October 1, 2009, regions are designated as“Specified Areas” if an oversupply of taxi services prevents functioning properly as a means of regional
public transportation, and measures are being adopted to optimize and revitalize such services byreducing supply, etc.

Aizu Bus Kanko ATS Co., Ltd., Aizu Bus Auto Service Co., Ltd.: No opinion expressed
6. Debt purchase application period
From Thursday, December 2nd, 2010 until the receipt by ETIC no later than Wednesday,
February 2nd, 2011
7. Request for temporary suspension
Under Article 27, Clause 1 of the ETIC Act, the financial institutions have been requested
not to recover loans or exercise any other rights (including repayment of bonds) they may
have as creditors before the end 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 Aizu Bus Companies. No request for support
will be made with regard to the trade debt. Therefore there will be no influence on tradeand general creditors.
9. Basis for decision to support
ETIC’s basis for deciding to provide support is as follows.
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9.1 Rationale
The Aizu Bus Companies provide a range of services in the Aizu region, which
comprises various towns and villages around Aizuwakamatsu City in Fukushima
Prefecture. Operations include local bus services, highway bus services, charter busservices and taxis. Aizu Bus is the sole operator of passenger bus services covering
the greater region, and the local bus service provides indispensable support to thelives of the local populace. The highway bus service, meanwhile, provides a long
distance transportation link between Aizuwakamatsu City and Fukushima, Koriyama,Sendai, Niigata and Tokyo, and is an important part of the social infrastructure in theAizu region, which does not enjoy the convenience of an extensive railroad network.
The Aizu region is a well-known tourist destination, home to famous sightseeing
locations, local food delicacies, cultural relics, hot springs and others. With more than
three million visitors per year Aizu is one of Japan’s leading destinations, and the Aizu
Bus Companies are widely used by tourists as a means of travelling within the region.
The collapse of the Aizu Bus Companies would make it difficult to maintain the publictransportation infrastructure outlined above, and as well as having a considerable
negative impact on local lives would also have an adverse impact on corporate activity
in the region. The negative ramifications would be particularly felt by those so called“the traffic weak” without private motor vehicles, including the elderly, students andothers without sufficient independent transportation capabilities. Failure of the Aizu
Bus services would also remove an important method of transporting visitors,
affecting one of the region’s primary assets—its tourism.
Accordingly, ETIC has determined that there is ample merit in supporting therevitalization of the Aizu Bus Companies as companies that play a valuable role insociety.
9.2 Role of ETICIn deciding to support the Aizu Bus Companies, ETIC’s planned role is as follows:(1) Coordinate among the financial institutions involved(2) Implement a capital injection of ¥100 million(3) Guarantee a ¥200 million maximum refinancing facility(guaranteeing its maximum50%)
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(4) Strengthen the management structure by providing management personnel.
With regard to (1) above, ETIC will reduce excessive interest-bearing debt andimprove the financial condition of the Aizu Bus Companies by requesting debt
forgiveness from financial institution creditors. With regard to (2), ETIC will provide
funding for business restructuring and related expenses by underwriting the issue of¥50 million of ordinary shares and ¥50 million of preferred shares. With regard to (3),ETIC will provide a credit guarantee covering 50% of a planned ¥200 million maximum
credit facility to be established with Toho Bank, thereby facilitating funding
procurement. With regard to (4), ETIC will support the business revitalization process
by seconding personnel to Aizu Bus concomitant after the capital injection describedin (2).

4Appendix: Outline of the Business Revitalization PlanSection 1: Overview of the companies receiving support
1.1 Name of company
Aizu Bus Co., Ltd. (hereafter, “Aizu Bus”); Aizu Bus Kanko ATS Co., Ltd.; Aizu Bus
Auto Service Co., Ltd. (collectively, the “Aizu Bus Companies”). Unless otherwise
stated, information in this Overview refers to Aizu Bus.
1.2 Head quarter
Byakkomachi195 Banchi, Aizu Wakamatsu-shi, Fukushima Prefecture (Headoffice: Oshiage 1-chome, Sumida-ku, Tokyo)
1.3 Year of establishment
1943
1.4 Capital¥90 million
1.5 Shares
Number of shares authorized:

13,000,000 shares

Number of shares issued and outstanding:

3,375,000 shares

1.6 Main business
Fixed route passenger bus services
Charter bus services
Taxi services
1.7 Number of employees
Drivers: 328; Office staff: 91; Other: 7 (as of end August 2010)
1.8 Main facility locations
Wakamatsu sales office, Kitakata sales office, Sakashita sales office, Nozawa salesoffice, Inawashiro sales office, Tajima sales office, Yamaguchi sales office,
Koriyama Konan sales office
1.9 Main banks
The Toho Bank, Ltd.
1.10 Affiliated companies
Aizu Staff Co., Ltd. (owned 100% by Aizu Bus and affiliated parties)
Bandai Kankosen Co., Ltd. (approximately 95% owned by Aizu Bus andsubsidiaries)
1.11 Financial overview (non-consolidated, for the year ended March 2010)
Net sales¥2,040,490,000
5Operating income (loss)(¥209,380,000) (after subsidies)

Ordinary income (loss)(¥165,780,000) (after subsidies)

Net assets¥580,080,000)

Total assets¥2,156,530,000

Section 2: Background and circumstances leading to request for ETIC support
Amid a declining trend in the number of passenger bus customers on regular routes, theAizu Bus Companies used the opportunity arising from revisions to the Road Transportation
Law in 2000 to enter the highway charter bus business, but has not been able to securesufficient earnings from the highway bus service to cover losses in the regular bus service.
Furthermore, when the economy entered a harsh recession from the latter part of 2008, anumber of large companies closed factories in Aizuwakamatsu City, leading to a successionof business closures in the central business district of the city, which had a severe impact
not only on passenger bus services but also on taxi services and charter bus services as
demand for leisure activities fell. As a result, managing the business became extremelydifficult.
Faced with this operating environment, the company sold idle real asset and other such
assets to provide funding, and in 2005 began a large scale restructuring that included theelimination of 44 bus routes. However, while the scale of the business shrank with theclosure of routes, insufficient progress was made in cutting costs. The businesses were
further weakened when sales fell with the sudden onset of the recession, and with capitalrequired to maintain the fleet at minimum necessary safety standards, interest-bearing debt
continued to increase.
As a result, in June 2010 Aizu Bus was faced with having to ask financial institution creditors
for an extension of debt repayment terms, with the prospect of the business being unable tocontinue and an associated impact on the local populace and the tourism industry.
Accordingly, the Aizu Bus Companies, after discussions with main bank Toho Bank, applied
to ETIC for support with the aim of pursuing a transparent, fair and comprehensive business
revitalization while minimizing damage to corporate value.

Section 3: Outline of business revitalization plan
1. Basic policy
The core aim of this business revitalization plan is to maintain the businesses’ public6

transportation infrastructure role while making use of the Aizu region’s strong tourism
assets to realize growth as an integral part of the region. More specifically, the plan
aims to develop a regional passenger bus service revitalization model based on thefollowing two elements:(1) Improve earnings and efficiency, focusing on making improvements to each bus
route (short-term initiative)
Based on an awareness of the role Aizu Bus plays in the regional transportation
infrastructure, management will work with local bodies and other organizations toimprove revenues and maximize economic efficiency.
Specific aspects of this will include eliminating routes run by Aizu Bus that do notshow the potential to become profitable, while reviewing regional subsidized routes.
Concomitant with this, vehicle, personnel and depot numbers will be streamlined.
Other measures will include matching the transportation fleet with current demand by
disposing of older vehicles in the fleet, abolishing inefficient procedures, andeliminating overlapping functions within the group.
(2) Promote public transportation as part of an integrated approach to regional
economic revitalization (medium-term initiative)
The plan aims to promote overall regional economic revitalization by actively working
with regional governmental bodies, tourist associations and other tourism-related
entities to increase external visitor numbers and develop the regional tourismbusiness.
Specific aspects of this will include identifying additional points of interest and othertourism resources to increase the appeal and awareness of the Aizu region andattract more visitors. For its own part, Aizu Bus will improve coordination between
highway bus, city bus and transportation hire services to make the regionaltransportation

infrastructure

moreconvenientandstimulate

visitation

andtransportation throughout the region.

2. Business restructuring
Aizu Bus will undergo a 100% capital reduction, and at the same time ETIC will
underwrite the issue of ¥50 million in ordinary shares and ¥50 million in preferred7

shares in order to provide for working capital, capital expenditure and management
restructuring expenses.
Further, Aizu Bus will be transferred the financial debt of two subsidiaries (Aizu BusKanko ATS Co., Ltd. and Aizu Bus Auto Service Co., Ltd.) on an indemnified basis, after
which a company separation will be implemented, and a new company will beestablished that will hold the non-operations-related real estate assets of thesecompanies and any debt above and beyond the amount expected to be repayablethrough business revenues.
After the company separation, the new company will sell the non-operations-related
real estate assets and use the funds to repay remaining financial debt. It is planned thatthe company will then be wound up using special liquidation proceedings after the saleof the aforementioned real estate assets (effectively receiving debt forgiveness).
3. Financial support
Of the ¥1,386,190,000 of debt held by the Aizu Bus Companies, financial support will
be sought for approximately ¥510 million. (Note: The amount of financial support isbased on a calculation of the current disposal value of non-operations-related realestate held by the companies. The final amount of financial support will change, as theamount of loan repayment is linked to the achieved real estate disposal values.)
4. Financing
Aizu Bus will implement a bond issue of ¥150 million for use as working capital andcapital expenditure. The bond issue will be underwritten by the Utsukushima Mirai
Fund.
As a means of covering any insufficiency in working capital that may arise, Aizu Bus willestablish a credit line (overdraft facility) with Toho Bank to a maximum of ¥200 million,
from which it will borrow as necessary to cover seasonal working capital needs. ETIC
will guarantee 50% of this credit amount.

5. Numerical Targets (Summary)
The forecast for the fiscal year ending March 2014 anticipates sales decreasing slightly
from current levels, but anticipates a recovery in operating income including subsidies.

8Section 4: Conformance with standards for support
1. Possession of effective management resources
Aizu Bus has utilizable management resources, with more than 400 employees engaged inoperating passenger bus services (local bus services and highway bus services), as well as
charter bus services and taxis that are an important part of the social infrastructure and havea high public interest.
2. Carrying Excessive Debt
Aizu Bus is carrying excessive debt obligation relative to its earnings capacity. Debt
forgiveness and other forms of financial support are essential for its business
revitalization.
3. Prospects for Business Revitalization
3.1. Consent of Major Creditors
The application for support by Aizu Bus has been made jointly with The Toho Bank,
Ltd.
3.2. Standards for Productivity Improvement
Implementation of the business revitalization plan will lead to improvement of 5% ormore in tangible fixed asset turnover within three years of the decision to provide
support, satisfying the required productivity improvement standard.
3.3. Standards for Financial Soundness
3.3.a. Ratio of interest-bearing debt to cash flow less than 10 times
The ratio of interest-bearing debt to cash flow is projected to be 0.32 times inthree years, satisfying the standard of less than 10 times.
3.3.b. Current revenue greater than current expenditures
The ratio of current revenue to current expenditures is projected to be 106.1%
in three years, satisfying the standard of current revenue greater than currentexpenditures.
4. Comparison with Liquidation Value
The recovery rate for debt applicable to the business revitalization plan is greater thanthe estimated recovery rate through bankruptcy proceedings.
5. Potential for Disposal of Debt, Shares or other Assets Acquired by ETIC within ThreeYears
The implementation of the business revitalization plan will greatly improve the9financial position of Aizu Bus, and because the company is expected to continue tosecure sustainable cash flow, ETIC has determined that there is sufficient possibilityof refinancing debt and disposing of shares.
6. Connection with structural oversupply
There is no scope for an increase in supply capacity as a result of the implementationof the business revitalization plan. Accordingly, the plan has been judged as ‘nothindering the resolution of structural oversupply’ with reference to Article 19 of the Acton Special Measures for Industrial Revitalization and Industrial Innovation.
7. Status of consultations with workforce
As part of the revitalization process, it is planned that meetings with labor unions will
be scheduled to discuss the business revitalization plan, and explanatory meetings for
employees will be scheduled to explain the main points of the business revitalization
plan.

Section 5: Responsibility of Shareholders and Management
All current representative directors and auditors of Aizu Bus will resign from their posts.
Because their presence is necessary for the implementation of the business revitalization
plan, all directors other than the two representative directors will, upon ceasing to become
directors, cooperate as necessary toward the revitalization of the company’s business.
Ordinary shares issued by Aizu Bus will be subject to a 100% capital reduction under thereorganization procedures.
ENDS10