ETIC to Provide Support to Yojoin Medical Corporation
July 7th 2010
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”), decided to provide
support to Yojoin 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(s) of persons or companies concerned
Yojoin Medical Corporation (hereafter “Yojoin”)
2. Name(s) of financial institutions jointly applying for rehabilitation support with Yojoin
Bank of Yokohama, Ltd.
3. Outline of business revitalization planPlease see appendix.
4. Comments from State Ministers in charge of ETIC
Prime Minister, Minister of Finance, Minister of Economy, Trade and Industry: Noopinion expressed
Minister of Health, Labour and Welfare: “I have no objection. May I add the followings?
ETIC should guide Yojoin promptly to communicate with the labor force as early aspossible. ETIC should pay enough attention to instruct that Yojoin should respect thecompliance with the related rules and regulations and that Yojoin should ensure enoughopportunities to discuss the matters sufficiently between them and the work force. ”
5. Comment from state minister supervising business activities
Minister of Health, Labour and Welfare: “Yojoin provides necessary inpatient care andother long-term medical services for people in the Yokosuka/Miura healthcare area, andI 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 Kanagawa Prefecture, who is working to secure the provision of appropriate
medical services in the region, and makes every effort to ensure that necessary
healthcare services can continue to be provided.”16. Debt purchase application period
From Wednesday, July 7th, 2010 for receipt by ETIC no later than Friday August 10th,2010.
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 and general creditors
The decision by ETIC to provide support involves requesting financial support only fromfinancial institutions providing loans to Yojoin. There will be no impact on other than thelenders above.
9. Basis for decision to support
ETIC’s basis for deciding to provide support is as follows.
9.1 Rationale
Yojoin is a corporation operating general hospital and geriatric healthcare institution inKanagawa Prefecture. The medical and care facilities operated by Yojoin provide local
residents with medical and nursing care services, and have a high degree ofcommunity involvement.
Yojoin’s contribution to the community is particularly important with respect to the factthat the corporation (1) focuses heavily on providing medical, nursing, and home
support services for the elderly, and (2) plays a major role in providing the kind ofmedical services that are inadequately represented in the local area (namely, careduring the sub-acute period prior to inpatient care of chronic conditions).
The collapse of Yojoin would have a severe impact on local communities. With thepopulation profile continuing to age, the inability to provide necessary medical andnursing services would greatly affect inpatients, outpatients and others relying on thefacility.
Accordingly, ETIC has determined that there is ample merit in supporting therevitalization of Yojoin as a means of contributing to the stable provision of medicaland nursing services in regional society.

2Moreover, there are relatively few examples in Japan of private revitalization of
medical corporations, and ETIC believes that successfully undertaking this support
program should provide a useful rehabilitation business model for the sector. Inaddition, it should be noted that regional medical corporations are generally
small-scale operations and have a tendency to lack sufficient skilled managementpersonnel. In this context ETIC, by drawing on internal human resources and taking
steps to develop the next generation of management personnel, aims to contribute tothe overall development and accumulation of useful business revitalization experiencein this sector.
9.2 Role of ETICIn deciding to support Yojoin, ETIC’s planned role is as follows:(1) Reduce the amount of interest-bearing debt by coordinating among financial
institutional creditors(2) Pursue business revitalization with the injection of new loans(3) Strengthen the management structure by supplying management personnelwith specialist skills.
With regard to (1) above, ETIC will reduce excessive interest-bearing debt andimprove the financial condition of Yojoin by requesting debt forgiveness from financial
institutional creditors. With regard to (2), ETIC will coordinate with Bank of Yokohama,Ltd., the main bank of Yojoin, to secure working capital and finance for structuralreform and other matters, with the aim of stabilizing cash flows and enabling thesteady implementation of business revitalization. With regard to (3), ETIC will place
experienced managers within the organization to strengthen its management structure,and work with senior personnel at Yojoin to ensure correct positioning of services andoperations to meet regional needs amid a continually changing business environment,
while establishing a stable management structure.
ENDS3

Appendix: Outline of the Business Revitalization PlanSection 1: Overview of the companies receiving support
1.1 Names of companies
Yojoin Medical Corporation (hereafter, “Yojoin”)
1.2

Main business
Operation of general hospital, clinic and geriatric healthcare institution

1.3

Main facilities(1) Yojoin Medical Corporation Kiyokawa Clinic
2-13-7 Komachi, Kamakura city, Kanagawa-Ken(2) Yojoin Medical Corporation geriatric healthcare facility Kamakura Silver Home
1-10-1 Yukinoshita, Kamakura city, Kanagawa-Ken

1.4

Head office
2-13-7 Komachi, Kamakura city, Kanagawa-Ken

1.5

Number of employees
241 (Including temporary employees. As of May 31st, 2010)

1.6

Labor union
None

1.7

Affiliated companies
None

1.8

Related bank and financial institutions
Bank of Yokohama, Ltd.
Welfare and Medical Service Agency
Credit Guarantee Corporation of Kanagawa-Ken; others

1.9

Financial overview (financial results for year ended March 31, 2010)
Medical practice revenue
Operating loss
Interest-bearing debt

¥2,131 million¥37 million¥2,543 million

Section 2: Background and circumstances leading to request for ETIC support
Deriving from a medical clinic established in 1891, Yojoin operates general hospital andgeriatric healthcare institution in Kamakura City, Kanagawa Prefecture, particularly focusing
on providing medical and nursing services for the elderly.
Yojoin has operated as a medical and geriatric healthcare institution in the region for over
100 years, but during the reconstruction of its facilities around 1993, changes of the designand contractor, and the discovery of archaeological remains on the construction site,

4

resulted in a lengthy period of closure for the hospital, causing a large increase ininterest-bearing debt.
Moreover, Yojoin was operated in a manner that hindered functional development as a
medical facility, for example by accepting a large number of long-term care patients into its
general hospital wards, which restricted the capacity for revenue growth. In combination witha failure to develop an appropriate management structure, this led to a drop in profitability
and problems with working capital and cash flow.
The collapse of Yojoin would have a severe impact on inpatients, outpatients, and others
relying on the facility, and significantly impair the ability to provide necessary medical andnursing services in the local communities.
To avoid this outcome, Yojoin made the decision to apply for support from ETIC in an effort
to reduce excessive interest-bearing debt and enable steady revitalization. Yojoin will workin coordination with Bank of Yokohama to plan and implement comprehensive businessrevitalization, incorporating the elimination of excessive debt, a shift in facility functionality,
and structural reform.

Section 3: Outline of business revitalization plan
1. Basic policy
In the first year, the business revitalization plan will seek to reduce excessiveinterest-bearing debt by requesting debt forgiveness from financial institutional
creditors. Additionally, it will work to enable the provision of medical and nursing
services that match the local needs and healthcare systems, ensuring the continuityof the hospital and elderly care facility in the region.
2. Main Initiatives(1)Transformation of hospital functions
A cycle will be established in which inpatients are taken in from partner andemergency clinics, are treated at general hospital wards, and provided with support
to return home at rehabilitation wards and elderly care facilities, before being
released to care facility, elderly nursing homes, or their own home.

(2)

Development of business management functions
To enable the steady implementation of the business revitalization plan, the board
members, auditors and committee members will be reorganized, the decision

5making process will be clarified, and a monitoring committee will be put in place toundertake appropriate management supervision.
Additionally, steps will be taken to recruit internal personnel and utilize external
personnel, while strengthening the medical and operational functionality andmaintaining rapid and appropriate provision of information to the managementcommittee.
(3) Request for financial support
Of the ¥2.5 billion owed to financial institutions and others by Yojoin, financial
support of approximately ¥800 million will be requested from financial institution andothers. With regard to the remaining debt, a request will be made for an adjustment
to the loan conditions (including an adjustment to the conditions of ¥300 million
subordinated quasi-capital loan from Bank of Yokohama).
(4) Financing
Financing of the business is expected to be sufficient, provided that financial
support is received in line with the business revitalization plan, along with additional
financing from Bank of Yokohama and ETIC.

Section 4. Conformance with standards for support(1) Standards for productivity improvement
The Enterprise Turnaround Initiative Corporation of Japan Support Standards(hereafter “Support Standards”) require that Yojoin Healthcare either increases ROE
by at least two percentage points, increases the tangible fixed asset turnover ratio byat least five percentage points, or increases the value-add per employee by at least
six percentage points within three years of the day of the decision to provide support.
As a result of the implementation of the business revitalization plan, Yojoin
Healthcare is expected to increase the tangible fixed asset turnover ratio by at least
five percentage points, and increase the value-add per employee by at least six
percentage points within three years of the day of the decision to provide support.
Accordingly, the business revitalization plan is deemed to be meeting the standards
for productivity improvement.
(2) Standards for financial soundness
The standards for financial support stipulate that the ratio of interest-bearing debt tocash flow should be within ten times, and current revenues should be greater than6

current expenses within three years of the day of the decision to provide support. As
a result of the implementation of the business revitalization plan, Yojoin Healthcare
is expected to meet all of these standards. Accordingly, the business revitalization
plan is deemed to be meeting the standards for financial soundness.
(3) Potential to refinance within three years
Implementation of the business revitalization plan is expected to significantly
improve the financial condition of Yojoin, enabling the company to reach suitablelevels of capital repayment and interest payment capacity, and making refinancing
highly possible.
(4) Connection with structural oversupply
The regions in which the hospitals operated by Yojoin are located (Kanagawa
secondary medical care area name: Yokosuka, Miura) are deemed to have an
oversupply of beds, in that the current total number of beds for rehabilitation andgeneral treatment (5,333, as of January 1, 2008) is in excess of the required numberof beds (4,545).
Under the business revitalization plan, the number of beds at Yojoin will bemaintained at the existing level, but the intake of post-acute and unstable patients
will be increased, concomitant with the under-representation of these services in thelocal area. Accordingly, the plan has been judged as not hindering the resolution of
structural oversupply.
(5) Consultation with workforce
There are no labor unions in Yojoin. As part of the revitalization process, it isplanned that meetings with employees will be scheduled promptly after
announcement of the decision to provide support, and opportunities provided todiscuss employment conditions and other aspects of the business revitalization plan.

Section 5. Responsibility of management
In addition to accepting the resignation of the administrative director and other members ofmanagement, the directors will abandon the compassionate allowance related with board
members’ retirements.
ENDS7