ETIC to Provide Support to Miyazu Seisakusho
September 17th, 2010
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”), has decided to provide
support to Miyazu Seisakusho 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
Miyazu Seisakusho Co., Ltd. (hereafter “Miyazu Seisakusho”)
2. Name(s) of financial institutions jointly applying for rehabilitation support with MiyazuSeisakusho
The Ashikaga Bank, Ltd. (hereafter “Ashikaga 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 decision to support
Miyazu Seisakusho. However, I ask that after reaching the decision to support, ETIC
should encourage Miyazu Seisakusho 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
Miyazu Seisakusho complies with related laws and regulations, and that Miyazu
Seisakusho 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: “The domestic die making industry is facing
significant changes in the operating environment, including a substantial fall in orders
since the onset of the global recession and shifts in the demand structure accompanying
1the rapid development of Asia’s manufacturing industry. I therefore believe that thebusiness integration of two of Japan’s major die making companies is a significant
undertaking. I hope that through steady progress in the business revitalization plan wewill see the creation of a cost structure able to compete with developing nations while
maintaining Japan’s outstanding product quality and delivery management capabilities,
with a sustainable employment foundation.”

6. Debt purchase application period
From Friday, September 17th, 2010 for receipt by ETIC no later than Wednesday,November 10th, 2010
7. Request for temporary suspension
Under Article 27, Clause 1 of the ETIC Act, financial institutions have been requested notto 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 Miyazu Seisakusho. 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
Miyazu Seisakusho, in the field of manufacturing press dies for the production ofautomotive components, is an important manufacturing base for automotiveproduction throughout the world. Backed by the world’s best technology, the company
has a global customer base that includes more than 150 clients in 26 countries,including Japan. The company has considerable brand strength, backed by its global
customer base and 60 years of accumulated technology since its founding, and, as arepresentative Japanese die maker it has contributed to automotive manufacture inmany regions, from emerging nations to advanced countries.
2Furthermore, since metal dies are a fundamental element of manufacturing, Miyazu
Seisakusho’s technical skills are contributing to the maintenance and strengthening of
the competitiveness of Japanese domestic manufacturing companies.
One of the main themes of this business revitalization plan is the merger of Miyazu
Seisakusho with Fuji Technica Inc. (hereafter, “Fuji Technica”), a major domestic metal
die manufacturer. It is hoped that this plan, by having ETIC play a catalytic role in thereorganization of an industry in a sector that has been exposed to global competition,
will help the industry extricate itself from low profitability brought on by a structural
oversupply from domestic manufacturers, and will provide an opportunity for furtherindustrial reorganization in the future. ETIC believes that this plan can be a test casefor other industry sectors that face the same issues.
The collapse of Miyazu Seisakusho would damage the businesses of many of its
customers (there were 30 projects underway as August 15th, 2010) and clients (over400 companies) and would threaten the livelihoods of its employees (466 as of July
31st 2010).
If the company were to fail, there would be ramifications for the local economies inwhich its businesses are located, and the production plans of automotive
manufacturers around the world would be exposed to considerable uncertainty. The
effects of the failure of the company on social and economic systems overall are too
great to be ignored. Accordingly, ETIC has determined that it is important to support
Miyazu Seisakusho so that its business can continue operating.
9.2 Role of ETIC
Under the terms of this plan, ETIC will act as a coordinator among the financial
institutions and others that are involved with Miyazu Seisakusho, and at the same time
coordinate the parties who have an interest in the business integration between
Miyazu Seisakusho and Fuji Technica. ETIC will provide indirect support for thecoordination of the financial institutions and other parties involved in the special
liquidation proceedings which will be conducted mainly by Miyazu Seisakusho so thatthe integration of its business into that of Fuji Technica can progress smoothly. ETIC
has no plans to make any investment in or provide financing to Miyazu Seisakusho.

3

Appendix: Outline of the Business Revitalization Plan

Section 1: Overview of the companies receiving support
1.1

Name of company
Miyazu Seisakusho Co., Ltd. (hereafter, “Miyazu Seisakusho”)

1.2 Head office
Sengoku 3-24-1, Oura-gun, Oizumi-machi, Gunma Prefecture
1.3 Date of establishment
April 1, 1967 (business founded in 1950)
1.4 Capital¥1,514,474,000
1.5 Shares
Number of shares authorized:

400,000 shares

Number of shares issued and outstanding:

320,000 sharesClass of shares
Ordinary shares

237,000 sharesClass A shares

83,000 shares

1.6 Main shareholders
Name ofshareholder
Tetsuhito
Miyamura

Relationship

Ordinary shares
Number ofshares

Representative
Director

Class A shares

Percentage of
total

Number ofshares

Percentage of
total

51,79021.9%--

Shinichi Tsukui

Director

32,730

13.8%-

Kinjiro Miyamura

Director

24,38810.3%--

24,000

10.1%

83,000100.0%

10,850

4.6%--

93,242

39.3%--

237,000

100.0%

83,000100.0%

AAI*-

Yoshitaka Tsukui

DirectorOtherTotals*AAI is an abbreviation for Asia Automotive Investment B.V.
1.7 Main business
Automotive industry metal pressing and resin-type molding dies
1.8 Number of employees
466 (regular employees: 458; contract employees: 7; part-timers: 1)
1.9 Main facility locations
Head office and plant: Oura-gun, Oizumi-machi, Gunma Prefecture
Ota plant: Higashi Kanai-cho, Ota-shi, Gunma Prefecture (operations currentlysuspended)
1.10

Main banks
4The Ashikaga Bank, Ltd.; The Shoko Chukin Bank, Ltd.; Sumitomo Mitsui
Banking Corporation; others
1.11 Affiliated companies
Miyazu America Inc.; Miyazu (France) SARL; Miyazu Motherson Engineering
Design Limited; Miyazu (Malaysia) SDN.BHD; AES Co., Ltd.
1.12 Financial overview (financial results for the year ended February 28, 2010)

Net sales¥7,178,830,000

Gross profit (loss)(¥549,130,000)

Operating income (loss)(¥2,027,150,000)

Ordinary income (loss)(¥2,159,240,000)

Net income (loss)(¥2,053,500,000)

Net assets(¥1,875,770,000)

Total assets¥9,934,970,000

Section 2: Background and circumstances leading to request for ETIC support
Miyazu Seisakusho is a major manufacturer of large press dies that are used to stamp out
automotive components. The company has brand power and a strong customer basebacked by a high level of technical expertise.
Nevertheless, in the face of the cost competitiveness of new metal die-makers in the Asian
region, particularly in South Korea and China, since 2000 Japanese domestic metal
die-makers—including Miyazu Seisakusho—have lost the price war and have been forced
to retreat into the area of high-precision dies where they can take advantage of theirtechnical superiority but where profit margins are slim.
As a result of excessive competition in the high-precision die sector, the Japanese domestic
die-making industry has fallen into a vicious cycle where it is having difficulty generating
sufficient levels of cash flow and is running low on the funding needed for investment toensure future competitiveness.
While Miyazu Seisakusho’s main customers shifted their orders over to these new metal
die-makers, the company neglected its profit and production management and repeatedly
made bids with low estimated profit margins in an attempt to secure orders. As a result, thecompany took on many projects in which it suffered unexpected losses.
5

As a result, in the last two financial periods the company has accumulated total losses of ¥5billion and has taken on excessive debt of nearly ¥19 billion. At present, manufacturers in
the U.S. and Europe are sounding warnings of the risk of Miyazu Seisakusho failing due tothe worsening of its financial condition. Accordingly, they are being cautious in ordering,making it even harder for the company to secure business.
To resolve this situation, Miyazu Seisakusho has agreed to integrate its business with Fuji
Technica, another major Japanese domestic metal die-maker.
In cooperation with its main bank, the Ashikaga Bank, Miyazu Seisakusho has concluded a“Memorandum of Understanding for Business Integration” (hereafter, “Memorandum ofUnderstanding”) with Fuji Technica and has applied to ETIC for support to ensure business
revitalization through transparent and fair means while minimizing damage to the value of its
business by promoting a swift business integration.

Section 3: Outline of business revitalization plan
1. Basic policy
The main components of this business revitalization plan call for Miyazu Seisakusho toreceive assistance from ETIC and to hand its business over to Fuji Technica, one of the“Big Three" companies in the large press metal-die industry along with Miyazu
Seisakusho, so that the two companies can integrate their operations. Through thisintegration, Miyazu Seisakusho will continue its operations and restructure its business.
Both Miyazu Seisakusho and Fuji Technica have been in friendly competition with one
another over the past several decades in the large press metal-die industry, and bothhave established their brands and their customer bases globally. Nevertheless, asmentioned earlier, the rapid rise of metal-die manufacturers in emerging nations and thereduction in the number of new car models due to the effects of the global recession
have made the business environments for both companies suddenly much moredifficult, and the futile war of attrition amongst the Japanese die-makers has put bothcompanies at risk of losing the advantages that they have developed.
In order to resolve the current situation, both companies have chosen to try to restore
their innate competitiveness through the integration of their operations.
There are three essential points to this business revitalization plan.
6

(1) Withdrawing from the wasteful war of attrition with fellow domestic die-makers in
the high-precision die sector in which Japanese companies are internationallycompetitive(2) Creating greater cost competitiveness by strengthening manufacturing plants inthe emerging nations(3) Building competitive superiority through the combination of product quality control
and delivery management skills that both companies possess, together with theenhanced cost competitiveness in (2) above.
The plan will aim to achieve these points and enable Miyazu Seisakusho to be reborn
as a profitable large press metal-die manufacturer boasting the world's highest level ofproduct quality.
2. Business plan
To realize these three essential points, Miyazu Seisakusho will integrate its businesswith Fuji Technica so that both can gain the greatest possible benefit from each other’s
strengths, supplement each other's scarce management resources, ease the domestic
oversupply of metal dies, and aim for sustainable increases in competitiveness.
The business plan of the integrated company can be summarized as follows.
(1) Reform to change the business structure(1) Reduce domestic supply capacity and strengthen profit management of orders(in the large high-precision die sector)(2) Increase orders through manufacturing bases in emerging nations (in sectors
other than large high-precision dies)(3) Strengthen financial footing to help secure more orders(2) Reform to achieve cost reductions(1) Strengthen profit management and cost management systems(2) Streamline head office functions(3) Reform of organizational management and personnel policies
Use the reform of organizational management and personnel policies, which willaccompany the business integration, as a lever to achieve a thorough change inbusiness structure (solve excessive competition resulting from the structural
oversupply,

achievegreatercost

competitivenessbystrengthening

manufacturing plants in the emerging nations, strengthen financial footing to help
secure more orders), and build up incremental, steady cost reductions to helpthe company shed its current low-profit structure.
73. Business restructuring
The business integration will come about as a result of Miyazu Seisakusho transferring
its business to Fuji Technica. On the September 17th 2010, Miyazu Seisakusho and Fuji
Technica concluded a Memorandum of Understanding.
Around late December 2010, Miyazu Seisakusho will transfer its entire business to Fuji
Technica ("the business transfer") and the operations of Miyazu Seisakusho will
become integrated with Fuji Technica operations and will continue as the business of anintegrated company.
After the business transfer, Miyazu Seisakusho will be dissolved and liquidated under
special liquidation proceedings.
4. Request for financial support
While undergoing the corporate restructuring outlined above, Miyazu Seisakusho will
repay its creditors with funds received as payment for the business transfer and funds
from the realization of assets outside the scope of the transfer, and will request debt
forgiveness for debts outstanding following this refund.
The final proportion of debt forgiveness will be determined in the special liquidation
proceedings.
5. Financing
ETIC believes that the financial aid set forth in this business revitalization plan (thecontinued purchase by the Ashikaga Bank of documentary bills of exchange with lettersof credit) will ensure that there will be no risk of Miyazu Seisakusho becoming short offunds.
6. Conformance with standards for support
1. Possession of effective management resources
Miyazu Seisakusho is a one of the world’s leading manufacturers of large press diesused for high precision stamping in the automotive industry, capable of short delivery
cycles from design through to production. The company has 60 years of accumulated
experience and technical development, and has a strong customer base and brandpresence, particularly in the area of high precision press dies for body side panels and8fenders.
2. Standards for productivity improvement
The company is expected to be able to meet productivity improvement standards
within three years of the date of ETIC’s decision to provide support.
3. Standards for financial soundness
The company is expected to be able to meet standards for financial soundness within
three years of the date of ETIC’s decision to provide support.
4. Connection with structural oversupply
Implementation of the business revitalization plan will lead to the business integration
and rationalization of Miyazu Seisakusho and Fuji Technica, contributing to a
reduction in structural oversupply.
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 workforce
As part of the revitalization process, it is planned that meetings with employees will bescheduled promptly after announcement of the decision to provide support, andopportunities provided to discuss employment conditions and other aspects of thebusiness revitalization plan.

Section 4: Responsibility of managers
The responsibility of the management team of Miyazu Seisakusho will be reflected in theresignation, after implementation of the business transfer, of all current directors andauditors, without directors’ retirement benefits.

Section 5: Responsibility of shareholders
Reflecting the responsibility of shareholders, in the special liquidation of Miyazu Seisakusho
outlined in the business revitalization plan shareholders are not expected to receive any
distribution of remaining assets, and will cease to become shareholders on completion of
the liquidation process.
ENDS9