ETIC to Provide Support to Keijinkai Medical Corporation
March 29th, 2012
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”) has decided to provide
support to Keijinkai Medical Corporation 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 corporation concerned
Keijinkai Medical Corporation (hereinafter “Keijinkai”)

2.

Name of financial institution jointly applying for rehabilitation support with Keijinkai
The Tokyo Tomin Bank, Limited (hereafter, “Tokyo Tomin Bank”)

3.

Outline of the 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
Keijinkai. However, I ask that after reaching the decision to support, ETIC should
encourage Keijinkai to discuss the situation with employees of the company as soon aspossible. I also ask that in advising on and guiding the implementation of the corporate
revitalization plan, ETIC should aim to ensure that Keijinkai complies with related laws
and regulations, and that Keijinkai also provides adequate opportunities for substantive
discussions with the workforce with due consideration of employment stability and othersuch factors.”

5.

Comment from State Minister supervising business activities
Minister of Health, Labour and Welfare: “Keijinkai is positioned as a facility providing
secondary emergency care and recovery rehabilitation services for people in thesouthern Tokachi medical region, which is an area that does not contain excess
sickbeds. I therefore have no objection to the decision to provide support.
In carrying out the revitalization plan, I ask that ETIC respects the opinion of theGovernor of Chiba, who is working to secure the provision of appropriate medical1

services in the region, and that all necessary medical functions continue to be delivered
through a system that has an appropriate scale in terms of available hospital beds andother such factors.”
6.

Debt purchase application period
From Thursday, March 29th, 2012 for receipt by ETIC no later than Thursday, May 31st,
2012

7.

Request for temporary suspension of debt collection
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 business revitalization plan, 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 assistance does not extend beyond requesting
financial support from those financial institutions designated in the revitalization planthat are providing loans to Keijinkai. No request for support will be made with regard totrade debt. Therefore there will be no impact on trade and general creditors.

9. Basis for decision to support
ETIC’s basis for deciding to provide support is as follows.
(1) Keijinkai is a medical corporation based in Yachiyo City, Chiba Prefecture which
operates hospitals, home-visit nursing care, ambulatory rehabilitation facilities andin-home long-term care support. The facilities operated by Keijinkai offer
comprehensive medical and care services and are of great importance to the localcommunity.
In particular, the southern Tokatsu medical region including Yachiyo City where
Keijinkai belongs has a shortage of hospital beds and medical needs are expected
to increase in the future owing to the aging of the population. Keijinkai has generaland sanatorium beds and accordingly makes an extremely large contribution to thesub-acute and chronic medical care and home support services in the locality. Inaddition, Keijinkai is the only sanatorium-bed equipped hospital in Yachiyo, Sakura
and Inzai Cities with in-patient dialysis facilities. As it is able to provide rehabilitation
services to dialysis patients, it performs an important and unusual role for the localcommunity.
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Accordingly, in the event Keijinkai’s financial condition deteriorated and it became
unable to provide medical services, there would be a major impact on users of thefacilities, including in-patients and in-home long-term care patients, and theprovision of medical services would be impaired in a region where the population isaging.
ETIC has therefore determined that there are sufficient grounds to support therevitalization of Keijinkai as it would contribute to the stable provision of medical
services in the local community and to ensure the medically necessary number ofphysicians, nurses and rehabilitation staff (physiotherapists, occupational therapists
and so on).
In providing this support, ETIC intends to contribute to the continued provision of
medical services to the community by appropriately improving Keijinkai’s financial
condition and providing a revitalization plan to normalize its financial transactions.
(2) Role of ETICThe role of ETIC in this matter is as follows:(1) Act as a coordinator among the financial institutions already involved (including
the purchase of debt)(2) Coordinate the involvement of new financial institutions (Tokyo Tomin Bank)(3) Supply management personnel
With regard to (1) above, ETIC will reduce excessive interest-bearing debt byrequesting support in the form of debt forgiveness from the financial institutions
concerned and purchase debt as necessary in order to improve Keijinkai’s financialcondition.
With regard to (2), ETIC will normalize Keijinkai’s financial transactions by arranging
funding from the newly involved financial institution, namely the Tokyo Tomin Bank,and by refinancing debts held by the previously involved financial institutions.
With regard to (3), ETIC will strengthen management systems by providing
management personnel and enabling Keijinkai to put in place a stable management
structure.

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Appendix: Outline of the Business Revitalization PlanSection 1: Overview of the companies receiving support
1.1 Names of companies
Keijinkai Medical Corporation
1.2 Main business
Hospital Operations
1.3 Main medical and nursing care facilities
St. Margaret Hospital: 195 general beds and 120 sanatorium beds
Asato Hospital (52 sanatorium beds)
1.4 Location of facilities
2-5-15 Yachiyo-Nishi, Yachiyo City, Chiba Prefecture
1.5 Number of employees
369 (of which 202 full-time and 167 non full-time)
1.6 Labor unionNone
1.7 Affiliated companies
SK Bussan Limited Private Company, Margaret Healthcare Systems Corporation
1.8 Financial institutions with whom transacting
Nisshin Debt Recovery Corporation, Welfare and Medical Service Agency
1.9 Financial overview
Interest-bearing debt: ¥2,797 million
Income from medical operations: ¥2,112 million
Profit from medical operations: ¥46 million
Section 2: Background and Circumstances Leading to Request for ETIC Support
Keijinkai has operated a hospital business in Yachiyo City, Chiba Prefecture since its
foundation in 1962, but its business performance has deteriorated owing to theestablishment of private practices by hospital-employed doctors and expanded numbers oflocum physicians. By the summer of 1990 interest-bearing debt had expanded to ¥4.1 billion
and the repayment of funds for setting up the business and the payment of taxes was inarrears.
The chairman of the board and eldest son of the founder also became the head of thehospital in 2001. He implemented improved management policies such as increased
capacity to handle emergency cases and a better dialysis care. Revenue and profits bothincreased.
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Keijinkai has been paying back debt to the affected financial institutions in a smooth mannerand revenues have been stable, but there is no prospect of repaying the excessive debts
incurred in the past. Accordingly, the financial institution providing new funds (the TokyoTomin Bank) and Keijinkai jointly applied for assistance to ETIC with the objective ofimproving Keijinkai’s financial condition and normalizing its financial transactions byobtaining refinancing funds from the main banks.
Section 3: Outline of business revitalization plan
1. Main Policies(1) Strengthening medical care in a region of high need
(1) Improved availability of in-patient dialysis
Improvements will be made to both the availability of in-patient dialysis in aregion which lacks such facilities, and to the rehabilitation of the affectedpatients.
(2) Strengthening home care services
The operation of visiting services (home-visit nursing care and ambulatory
rehabilitation) and of home care support will be improved.
(2) Consolidation, reorganization and effective use of group assets(1) Reorganization of two Medical Service Companies
Two medical service companies will be liquidated after their assets andoperations have been absorbed into Keijinkai.
(2) Efficient utilization of Asato Hospital’s Grounds
A plan to build and operate a medical complex in the grounds of the Asatohospital is being evaluated.
2. Business reorganization (structure)
No reorganization of Keijinkai’s business is planned under this revitalization plan.
3. Request to creditors for financial support
Keijinkai will seek forgiveness from the related financial institutions for ¥1,149 million ofthe ¥2,207 million debt principal and the interest and delinquent payments thereon.

54. Funding plans
Funds for debt redemption as determined by this revitalization plan will be provided fromoperating cash flow and from loans from Tokyo Tomin Bank.
Section 4: Conformance with standards for support
This revitalization plan meets ETIC’s standards for support.
1. Possession of effective management resources
Keijinkai provides mainly sub-acute and chronic medical care in a region with a shortageof hospital beds. Above all, it performs an important role in the area as a rare medicalinstitution accepting long-term dialysis patients. It has secured the requisite number ofnursing staff to provide medical care in a prefecture that has experienced a shortage inrecent years.
2. Standards for productivity improvement
Implementation of this revitalization plan is expected to meet the standards for improved
productivity.
3. Standards for return to financial soundness
Implementation of this revitalization plan is expected to meet the standards for a return
to financial health.
4. Comparison with liquidation value
The debts recoverable as a result of following this revitalization plan are expected toexceed the amount recoverable through bankruptcy and civil rehabilitation proceedings.
5. Potential to refinance within three years
Implementation of this revitalization plan is expected to improve Keijinkai’s financial
position substantially and to offer a good chance that cash flows for debt redemption will
be consistent with the debt repayment plan.
6. Connection with structural oversupply
The implementation of this revitalization plan will not result in an increase in Keijinkai’s
supply capacity, i.e. it will not increase the number of beds. Moreover, the region has ashortage of hospital beds so it has been judged that the plan will not impede theelimination of any structural excess capacity.

67. Status of consultations with workforce
Keijinkai does not have a labor union, but it is planned that meetings with employees will
be scheduled promptly after the decision to provide support is announced to explain thebusiness revitalization plan, including employment and working conditions.
Section 5: Management responsibility and governance
1. Responsibility of management
Directors recognized as being responsible for Keijinkai’s mismanagement will resign
and forfeit the directors’ retirement benefit.
2. Responsibility of equity stakeholders
Employees recognized as having management responsibility will resign and forfeit theirright to seek repayment of their stake in Keijinkai.

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