(Translation for reference purposes only)

March 11, 2014

Company name: Tokuyama Corporation
Representative name: Kazuhisa Kogo,
President and Representative Director(Code No. 4043, First Section TSE)
Contact: Takeshi Nakahara, Executive Officer, General Manager of Corporate Planning Div.
and Corporate Communications & Investor Relations Dept.
TEL: +81-3-6205-4832

Notice concerning the Procurement of Funds through a Subordinated Loan
Tokuyama Corporation (“Tokuyama” or “the Company”) today announced details of its decision toprocure funds by drawing down a subordinated loan on March 20, 2014. Brief details are presented
as follows.
1. Objective and Significance of the Subordinated Loan
Tokuyama traces its roots back to 1918, when it began producing soda ash in Tokuyama, Yamaguchi
Prefecture. While adding various chemicals to its product lineup, the Company has growth toincorporate diverse businesses covering a wide range of products including organic and inorganic
chemicals, plastics, cement/building materials, electronic materials, and materials used in the medical
field.
In 2008, Tokuyama identified efforts to strengthen strategically growing businesses while bolstering
its international competitiveness as basic strategies under its overarching commitment to a venturespirit & innovation. As a part of these endeavors, the Company has continued to reinforce thecompetitiveness of Tokuyama Factory while promoting growth strategies that include theconstruction of a polycrystalline silicon plant in Malaysia. Despite this hard work, Tokuyama
reported a substantial downturn in earnings in fiscal 2012, the fiscal year ended March 31, 2013,
resulting in a decrease in shareholders’ equity. This decline was largely attributable to the drop in
polycrystalline silicon business earnings on the back of the rapid deterioration in businessconditions and most notably the glut in supply of solar cell-related materials and inventory
adjustments in semiconductor-related materials.
Recognizing that such products as polycrystalline silicon are highly susceptible to changes in market
conditions, the Tokuyama Group places considerable emphasis on maintaining an appropriate levelof shareholders’ equity in its bid to secure a sound financial position. Taking the aforementioned
into consideration, Tokuyama has determined the critical need to improve its financial standing bystrengthening its equity credit attributes. As a result, the Company has decided to procure funds
through a subordinated loan. It is expected that ratings agencies will recognize the equity credit
attributes of the subject subordinated loan. On this basis, the Company is anticipating to bolster its
capital position and to restore its shareholders’ equity in real terms without any subsequent dilutive
effect on its shares. At the same time, Tokuyama will work diligently to promote growth strategies ina bid to enhance its corporate value.
Plans are in place to utilize the bulk of the funds procured from the subordinated loan to repay
interest-bearing debt.
2. Characteristics of the Subordinated Loan
The subordinated loan is hybrid financing, the characteristics of which place it midway between
equity and debt. Although it is debt, it also has aspects and characteristics similar to equity, such as
the mandatory deferral of interest payments and an especially long repayment period. As a result, it
is expected that the ratings agency, Rating and Investment Information, Inc., will recognize 70% of
the total value of the financing as having equity credit attributes for the purpose of rating.
-1-3. Overview of the Subordinated Loan
(1) Total amount of the funds to be procured:(2) Date of agreement execution:¥60 billion

March 11, 2014

(3) Drawdown date:

March 20, 2014

(4) Final repayment term:

March 20, 2074

However, Tokuyama may make an early repayment of all or a portion of the principal of thesubordinated loan on any interest payment date on or after March 20, 2019. Furthermore, theCompany may also make an early repayment of all or a portion of the principal of the subordinatedloan in each of the following cases:(i) When Tokuyama is seriously and unavoidably disadvantaged as a result of the handling of theinterest on the subordinated loan on or after the date of drawdown due to taxation considerations
despite reasonable efforts by the Company; or(ii) When there is a public announcement or the Company receives notification that ratings agencies
have determined that the subordinated loan has equity credit attributes that are lower than thesubordinated loan at the time of drawdown; or(iii) When there is an agreement with all lenders and agents.
(5) Replacement clauseIn the case of an early repayment of the subordinated loan, Tokuyama intends to procure funds,
within a 12-month period before the date on which it will make that early repayment, that have been
approved by ratings agencies as having equity credit attributes equal to or greater than thesubordinated loan.
(6) Applicable interest rate
A floating rate of interest based on six-month JPY LIBOR from March 20, 2014 to March 20, 2019;
stepped up floating rate (1% higher) from March 20, 2019.
(7) Interest payment dates
March 20 and September 20 each year with September 20, 2014 as the first interest payment date.
(8) Constraints on interest payment
1) Mandatory suspension of interest
The payment of all or a portion of the interest on the subordinated loan shall be deferred in thecase of each of the following specified cases:i) The interest payable on the relevant interest payment date shall be deferred in full when theEBITDA margin (the ratio of the sum of operating income and depreciation expenses to net sales)
is less than 8% for the most recent two consecutive fiscal years with respect to the Company’ssettlement period consolidated financial statements.
ii) The interest payable on the relevant interest payment date shall be deferred in full when the ratioof net liabilities to total capital exceeds 70% with respect to the Company’s settlement and interim
period consolidated financial statements.
iii) In addition to the above, there is a provision that allows for the deferral of interest payable
either in part or in full when there is a distributable amount stipulated under the Companies Act ofJapan or preferred stocks depending on the status of distribution.
2) Optional suspension of interest
Tokuyama may, at its discretion, defer all or a portion of the interest on the subordinated loan.

-2-(9) Subordination
1) In the event liquidation proceedings are commenced, the decision to commence bankruptcy
proceedings is made, or the decision to commence reorganization, rehabilitation, or any otherproceedings is made against the Company, the provider of the subordinated loan may request
repayment or redemption under the agreement after the repayment of all liabilities in full excluding
the subordinated loan or other liabilities of a similar nature to the subordinated loan.
2) Any change to the terms and conditions of the agreement that disadvantage any creditors otherthan the creditors of the subordinated loan in any respect whatsoever shall not be recognized.
(10) Equity credit attributes of the subordinated loan evaluated by ratings agencies
Class 4 / 70% (Rating and Investment Information, Inc.)(11) Investors (lenders) participating in the subordinated loan
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
The Yamaguchi Bank, Ltd.
Four other banks-3-