ETIC to Provide Support to Seizenkai Medical Association and Related CompanyApril 12th, 2012
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”), has decided to provide
support to Seizenkai Medical Association 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
Seizenkai Medical Association and Saidaiji Hospitality Service Limited Liability
Company (hereafter “Seizenkai”)
2. Name of financial institution jointly applying for rehabilitation support with Seizenkai
The Chugoku Bank, Ltd. (hereafter “Chugoku 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, 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
Seizenkai. However, I ask that after reaching the decision to support, ETIC should
encourage Seizenkai to discuss the situation with employees as soon as possible. Ialso ask that in advising on and guiding the implementation of the corporate
revitalization plan, ETIC should aim to ensure that Seizenkai complies with related laws
and regulations, and that the company also provides 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 Health, Labour and Welfare: “Although Seizenkai is situated in the southeastern medical area of the prefecture, a region that has an oversupply of hospital beds,
I have no objection to the decision to provide support, because the hospital plays animportant role as a provider of secondary emergency medical services and a member of1

the duty hospital roster.
I ask that in implementing the revitalization plan, due consideration is given to theopinion of the Governor of Okayama Prefecture, who is working to ensure that a proper
structure exists for the provision of medical services, and that all necessary medical
functions continue to be delivered through a system that has an appropriate scale interms of available hospital beds and other such factors.”
6. Debt purchase application period
From Thursday, April 12th, 2012 for receipt by ETIC no later than Friday, June 15th, 2012.
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, other thanthose permitted under the corporate revitalization plan, before the end 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 Seizenkai. No request for support will bemade with regard to trade debt. Therefore there will be no impact on trade creditors.
9. Basis for decision to support
ETIC’s basis for deciding to provide support is as follows.
(1) Rationale
Seizenkai is a medical association that operates several facilities, including a hospital,
a care facility for the elderly, and a home-visit nursing services center in the Saidaiji
district of Higashi-ku in Okayama City.
These medical and care facilities offer a comprehensive range of medical and careservices to the local community, and are of high public value. The Okayama Saidaiji
Hospital that Seizenkai operates provides emergency medical care, and receives over
800 emergency patients by ambulance per year. In addition to providing a seamlessrange of medical services covering the stages from the acute phase through to thechronic and recovery phases, the hospital and geriatric care rehabilitation services
support the early-return-home of patients in the recovery and chronic phases.
Therefore, if Seizenkai were no longer able to provide these medical and careservices, this would have a considerable impact on in-patients, facility residents and2

other facility users and home-based patients, and would disrupt service delivery
systems in the local community.
ETIC's revitalization of Seizenkai will contribute to the stable supply of medical andcare services in the local community.
Seizenkai has a good relationship with Okayama University and other institutions. In
addition to maintaining a constant number of medical staff in fields including internal
medicine, gastroenterology, orthopedics and neurosurgery, Seizenkai has recruited(from those institutions) nursing directors and other core human resources and has
succeeded in increasing the numbers of nursing and rehabilitation care-givers. Since
Seizenkai has medical staff who have a high level of management skills, we havedetermined that there is enough reason for ETIC to support the recovery of Seizenkai.
By providing support in this project, ETIC can present a model case for therevitalization of medical institutions that provide emergency medical care, logistic
support for acute-care hospitals, and support for the early-return-home of patients;
which will in turn contribute to the accumulation of knowledge of how to revitalize
regional medical and care businesses.
(1) The role of ETICIn this support program, the ETIC will be involved in the development of the business
revitalization plan, and will play a specific role in the coordination of the financial andother institutions concerned.
In other words, by requesting financial assistance from the financial and otherinstitutions concerned regarding the subordination of debt and other procedures, ETIC
will work to improve the financial state of Seizenkai.
ETIC will not conduct financing or capital injection in this particular scheme.

Ends3Appendix: Outline of the Business Revitalization PlanSection 1. Overview of the companies receiving support
1.1 Names of companies
Seizenkai Medical Association and Saidaiji Hospitality Service Limited Liability
Company (Hereafter “Seizenkai”)
1.2 Main Business
Hospital and geriatric care facility operations
1.3 Main medical and geriatric facilities(1) Okayama Saidaiji Hospital(2) Hitachi Elderly Care Center(3) Saidaiji Home-visit Nursing Service Center(4) Saidaiji Residential Care Support Office
1.4 Office locations
Seizenkai Medical Association:

8-41

Saidaiji

Nakanohonmachi, Higashi-ku,

Okayama-shi, Okayama Prefecture
Saidaiji Hospital Service:

802-11 Saidaiji Nakano, Higashi-ku, Okayama-shi,
Okayama Prefecture

1.5 Number of employees
Seizenkai Medical Association: 300 (including 202 full-time employees)
Saidaiji Hospital Service: 0
1.6 Labor union
None
1.7

Affiliated companies
None

1.8

Main banks
The Chugoku Bank, Ltd. (hereafter “Chugoku Bank”), The Awa Bank, Ltd., others

1.9

Financial overview (financial results for year ended March 31, 2011)
Interest-bearing debt

¥1,443 million

Medical practice revenue¥1,712 million

Medical practice profit¥163 million

Section 2. Background and circumstances leading to request for ETIC support
Since its establishment in 1972, Seizenkai operated an orthopedic hospital in the Saidaiji
district of Higashi-ku in Okayama City; however, as a result of borrowing to fund investment
in a long-term care facility for the elderly and other facilities, the level of interest-bearing debt
4

grew to ¥3 billion, nearly double that of sales.
Following this investment, as a result of ongoing resignations of key medical and nursing
staff, Seizenkai had no choice but to close part of the hospital and reduce the numbers ofresidents at the long-term care facility for the elderly, however, there is no indication that thedebts can be repaid.
In response to this crisis, the current Chairman took office in 2008, and the current hospital
Director took office in 2010. They invited from outside part-time doctors, directors of nursing
and directors of hospital administration, made organizational improvements, and replacedsome of the medical staff. They also improved the hospital's emergency and other medical
functions and worked to re-balance income and expenditure.
Despite these efforts, the hospital buildings have become run down over time, and it will bedifficult for the hospital to maintain its current medical functions over the medium - andlong-term.
With the goal of improving their financial footing so that they are able to steadily maintainand develop their medical functions over the medium- to long-term, Seizenkai, together with
Chugoku Bank (the principal financial institution) have applied to ETIC for revitalization
support.
Section 3. Outline of the Revitalization Plan
1 Basic policy(1) Corporate governanceThe current hospital Director will become the Chairman, and stabilize the system ofcorporate governance.
(2) Main initiatives(1) Maintain and enhance clinical functions
Maintain and enhance clinical functions (particularly the acceptance of emergency
patients arriving by ambulance) with a view to building a new hospital in the future(2) Recruit personnel and invest in equipment
Make progress in the recruitment of medical personnel and the investment inequipment required for (1).
(3) Dissolve corporate relationships
Transfer the assets of Saidaiji Hospital Services to Seizenkai Medical Association,reorganize the business relationship and then liquidate Saidaiji Hospital Services.
2. Business reorganization (structure)
There are no plans to restructure Seizenkai Medical Association’s operations.
5

The assets of Saidaiji Hospital Services will be transferred to Seizenkai MedicalAssociation, the business relationship will be reorganized, and then Saidaiji HospitalServices will be liquidated.
3. Requests to creditors for assistance
Seizenkai will ask the financial institutions concerned if the loan conditions for¥650 million of the total ¥1,550 million in borrowing from these financial institutions canbe altered (converting the loan into a capital-subordinated loan (debt-debt swap)) andthe conditions for the remainder of the loans be all made the same. The changes to theloan conditions will come into effect after the transfer of the real estate and otherbusiness assets from Saidaiji Hospital Services to Seizenkai Medical Association has
been completed.
4. Funding plans
It is assumed that the funds for the payments required in this business revitalization
plan will come from the sale of non-business assets and future operating cash flow.
Funding after the decision has been made to provide support is expected to be stable.
At the present point in time there are no plans for Seizenkai to receive any newfinancing or other fresh operating capital.

Section 4. Conformance with standards for support
This business revitalization plan meets ETIC’s standards for support.
1. Possession of effective management resources
The hospital that Seizenkai operates offers emergency medical services and receives
over 800 emergency patients by ambulance per year. The hospital helps shorten theambulance travel times in the region to the east of Higashi-ku in Okayama City. In
Okayama, where there is a shortage of medical facilities, in addition to providing aseamless range of medical services covering the stages from the acute phase throughto the chronic and recovery phases, the hospital and geriatric care rehabilitation
services support the early return home of patients in the recovery and chronic phases.
Seizenkai has good relationships with Okayama University and other institutions. In
addition to maintaining a constant number of medical staff in fields including internal
medicine, gastroenterology, orthopedics and neurosurgery, Seizenkai has also
attracted nursing directors and other core human resources and has succeeded inincreasing the numbers of nursing and rehabilitation care-givers, thereby demonstrating6

that it has medical staff who have a high level of management skills.
Therefore, we consider that Seizenkai is an operator which has valuable management
resources.
2. Standards for productivity improvement
Seizenkai is expected to meet the required standards with respect to productivity within
three years of the implementation of this revitalization plan.
3. Standards for financial soundness
Seizenkai is expected to meet the required standards with respect to financial soundness
within three years of the implementation of this business revitalization plan.
4. Potential to refinance within three years
Implementation of the business revitalization plan is expected to significantly improve thefinancial condition of Seizenkai, making it sufficiently possible to fund repayments fromsustainable cash flow in accordance with the repayment schedule.
5. Connection with structural oversupply
The hospital operated by Seizenkai is located in the South Eastern medical region ofOkayama Prefecture, which is deemed to have an oversupply of general beds.
However, because the hospital provides medical services that are in shortage in theregion, including emergency medical care, post intensive care support, and early stagehome-based recovery support functions, the plan has been judged as not hindering theresolution of structural oversupply.
6. Status of consultations with workforce
As the company does not have an employees union it is planned that meetings withemployees will be scheduled promptly after announcement of the decision to provide
support, and opportunities provided to discuss employment conditions and other aspectsof the business revitalization plan.
Section 5: Responsibility of management and governance
1. Responsibility of directors(1) Seizenkai Medical Association
The Chairperson will resign, but will retain his position as a board member. The
hospital Director will assume the role of Chairman.
All other board members who are deemed responsible for the company’s situation
will resign from their positions and their directors’ retirement benefits will be7

removed. All business assets held by those board members will be transferred toSeizenkai Medical Association.
(2) Saidaiji Hospital Service
Current directors will resign from their positions, and their directors’ retirement
benefits will be removed. Further, to ensure the smooth implementation ofliquidation proceedings, all debt held by current and former directors will betransferred to Seizenkai Medical Association at a memorandum price.
(3) Guarantee Responsibility
The board members and directors, who are responsible for guaranteeing thecompany’s liabilities, will fulfill part of their responsibility and will also renounce theirclaims on Seizenkai.
2. Responsibility of investors(1) Seizenkai Medical Association
All current and former employees of Seizenkai Medical Association that are
deemed responsible for its management, will resign from their positions and will
forego their rights to request repayment of their investments. Further, following thedecision to support, Seizenkai Medical Association is scheduled to promptly
become a medical association without equity contribution.
(2) Saidaiji Hospital Service
To ensure the smooth implementation of liquidation proceedings, all shareholders
shall transfer the shares that they hold to the management of Seizenkai MedicalAssociation at no cost.

Ends8