November 27, 2014

To Our Shareholders

Company name:
Representative:
Securities code:
Location of head office:Information disclosure officer:
Phone:Don Quijote Holdings Co., Ltd.
Koji Oohara,
President and Representative Director and COO
7532, First Section, Tokyo Stock Exchange
2-19-10 Aobadai, Meguro-ku, Tokyo
Mitsuo Takahashi,
Senior Managing Director and CFO+81-3-5725-7588 (Direct)

Notification Regarding Underwriting of Convertible Bonds and Share Options Issued by
Japan Asset Marketing Co., Ltd.
Don Quijote Holdings Co., Ltd. (“the Company” hereafter) hereby provides the following notice regarding
a resolution adopted at a meeting of the board of directors today concerning the underwriting of unsecured
convertible bonds and share options to be issued based on a third-party allocation by Japan Asset Marketing
Co., Ltd. (“JAM” head office: Edogawa-ku, Tokyo; President and Representative Director: Takayuki
Koshizuka; Tokyo Mothers: 8922 ), a consolidated subsidiary of the Company.

1. Purpose of this underwriting
JAM became a consolidated subsidiary of the Company in April 2013 as a result of a third-party allocationof shares based on a capital and business alliance agreement between the Company and LN Co., Ltd., awholly-owned subsidiary of the Company. Thereafter, the Company created a structure where it transferred
real estate (buildings) owned by the Don Quijote Group to JAM. JAM developed and managed this realestate and newly acquired real estate, and various retail companies in the Don Quijote Group leased
business stores and other real estate from JAM. This change of structure produced benefits in that theCompany became able to efficiently manage and use real estate owned by the Don Quijote Group andvarious retail companies in the Don Quijote Group became able to concentrate on their core businesses.
The Company believes that it will be possible to further accelerate the opening of new stores, which is thegrowth engine for the Don Quijote Group, by adopting a method whereby JAM will acquire real estate in
the form of new income-generating properties and land for development by using the funds procured fromthe issuance of the unsecured convertible bonds and share options, and various retail companies in the Don
Quijote Group will lease real estate (buildings) owned by JAM.
In this way, it was decided to conduct this underwriting because the Company believes that further
strengthening a structure that enables JAM to efficiently manage and use real estate (buildings) used in theDon Quijote Group through this underwriting will be beneficial from the viewpoint of improving thecorporate value of the Don Quijote Group.
2. Outline of JAM(As of November 27, 2014)
1)

Company name

Japan Asset Marketing Co., Ltd.

2)Main business

Real estate lease and management businessactivities
3)

Date ofSeptember 1, 1999

establishment
4)

Head office

4-14-1 Kita-Kasai, Edogawa-ku, Tokyo, Japan

location
5)

Representative

Takayuki Koshizuka, President and Representative Director

6)

Capital

4,097 million yen7)

Number of76 (as of the end of September 2014)

employees
8)

Major

LN Co., Ltd.

shareholders

The Bank of New York, Non-Treaty JASDEC accountand(Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)

shareholding

CBHK－GUOTAI JUNAN SECURITIES (HONG KONG)

ratio (as of theLIMITED－CLIENT ACCOUNT(Standing proxy: Citibank

end of Sep.

Japan Ltd.)2014)

CBHK－PHILLIP SEC(HK) LTD－CLIENT MASTER

49.19%(Standing proxy: Citibank Japan Ltd.)State Street Bank and Trust Company (Standing proxy: Tokyo
Branch of. Hong Kong Shanghai Bank)
9)

Relationshipbetween theCompany andJAM

Capitalrelationship

7.47%

3.28%

1.95%
1.37%

The Company’s fully-owned subsidiary, LN Co., Ltd.,owns 136,000,000 shares (49.19% of voting rights) ofJAM.

Personnel

The Company seconds to JAM its three directors andrelationshiptwo auditors.
JAM and the Company, as well as its fully-owned
subsidiary LN Co., Ltd. concluded a capital andbusiness alliance agreement and have agreed that (i)JAM gives advice and provides its knowledge andknow-how to the Don Quijote Group for efficient

Businessmanagement of its owned properties and (ii) business

relationshipalliance will be conducted regarding various measures
to expand users of JAM services and raise its
recognition by using the Company’s high profile.
In addition, the Company leases outs its fixed assets(land) and extends loans to JAM based on a loan
agreement.
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URL

http://www.jasset.co.jp

Consolidated business performance and consolidated financial condition for the last three11)

years (million yen)

Fiscal term

Fiscal year endedFiscal year ended

Fiscal year ended

March 31, 2012

March 31, 2013

March 31, 2014

Total net assets

-152

204

3,725

Total assets

32931358,776

Total net assets per-191.75

share (yen)Net sales

1.39

13.48

83

131

3,378

Operating profit

-545

-385

1,105

Recurring profit-595-427

803

Net profit

-802

-205

1,833

-1,243.83

-1.94

6.82

－－－Earnings per share(yen)Dividend per share(yen)(Note) JAM conducted a 100-for-1 stock split of common shares with an effective date of November 1,2013. Net profit per share and net assets per share are calculated assuming the stock split wasconducted at the beginning of the fiscal year ended March 31, 2013.
3. Outline of this underwriting
The Company intends to underwrite all of the following unsecured convertible bonds and share options
issued by JAM.
(1) Unsecured convertible bonds
1)
2)

3)

Payment date
Total number of shareoptions
Issue price of bonds
and share options

December 12, 2014
250
The issue price of the bonds is 100,000,000 yen (100 yen per facevalue of 100 yen)
The share options will be issued gratis

Number of latent4)

shares resulting from

168,918,918

this issuance
5)6)Aggregate amount ofissue price
Conversion price

25,000,000,000 yen
148 yen(i) Fixed conversion price and number of applicable shares
The convertible bonds have a fixed conversion price and are different

7)

Other

from so-called MSCB and MS warrants, which have price adjustment
conditions attached.
(ii) Early redemption provisions-3-

From the day following the issuance date of the convertible bonds
onward, JAM is permitted to redeem all or a part of the remaining bonds
after notifying the Company, which is the holder of the bond rights, of
this intention, the reason for this, and other necessary matters in advanceand in writing.
(iii) Transfer restrictions
The transfer of the convertible bonds shall require the approval of theboard of directors of JAM.
(iv) Other
Each of the above items is conditional upon the effectiveness of
notification by JAM under the Financial Instruments and Exchange Act.

(2) Share options
1)
2)
3)

Allotment date
Total number of shareoptions
Issue priceDecember 12, 2014
675
86,000 yen per share option (aggregate amount of 58,050,000 yen）

Number of latent4)

shares resulting from67,500,000 （100,000 shares per share option）

this issuance
10,048,050,000 yen
5)Payment amount(Breakdown)
Payment amount on issuance of share options: 58,050,000 yen
Payment amount on exercise of share options: 9,990,000,000 yen

6)

Exercise price148 yen(i) Fixed exercise price and number of applicable shares
The share options have a fixed exercise price and are different fromso-called MSCB and MS warrants, which have price adjustment
conditions attached.
(ii) Exercise instructions and exercise approval for the share options
Under the share option allotment agreement that is scheduled to beconcluded between JAM and the Company, which is the allottee, if theclosing price of JAM common shares based on ordinary transactions on7)

Other

the Tokyo Stock Exchange, Inc. exceeds the exercise price on any day
during the exercisable period, JAM may issue instructions to theCompany, which is the allottee, to the effect that the share options should
be exercised (the “Exercise Instructions” hereafter), after specifying thenumber of share options that should be exercised, during the exercisable
period. Moreover, if JAM issues the Exercise Instructions, it is planned to
be stipulated that the Company, which is the allottee, must exercise thenumber of share options specified in the Exercise Instructions according
to the Exercise Instructions, in accordance with the Exercise Instructions,-4-within ten trading days from the date when the Exercise Instructions areissued.
Further, under the same agreement, if the Company, which is the allottee,
wishes to exercise the share options that it holds (but excluding the casewhen it exercises the share options in accordance with the Exercise
Instructions issued by JAM), it must request approval to exercise theshare options (the “Exercise Approval” hereafter), after specifying thenumber of share options it wishes to exercise. In addition, when receiving
the Exercise Approval from JAM, it is planned to be stipulated that theshare options may be exercised within the range of the number specified
in the Exercise Approval, in accordance with the Exercise Approval, only
within ten trading days from the date when the Exercise Approval isreceived.
Moreover, with respect to the same agreement, it is planned to bestipulated that the Company may not exercise the share options except in
the case when the Company exercises the share options according to theExercise Instructions issued by JAM and the case when it exercises theshare options in accordance with the Exercise Approval after obtaining
the Exercise Approval of JAM.
(iii) Acquisition provisions
After the issuance of the share options, when the board of directors ofJAM resolves to acquire the share options, JAM may acquire all of theshare options based on the issue price. In this case, after this resolution,
JAM shall provide prior notification to the Company, which is the option
rights holder, in advance and in writing up to two weeks before the date ofacquisition of the share options.
(iv) Transfer restrictions
The transfer of the share options shall require the approval of the board ofdirectors of JAM.
(v) Other
Each of the above items is conditional upon the effectiveness of
notification by JAM under the Financial Instruments and Exchange Act.

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4. Status of shareholding of the Company and its affiliates if all of the unsecured convertible bonds
are converted to common shares and all of the share options are exercised (estimated)(1) Number of shares held
before change

136,000,000 (number of voting rights: 1,360,000, percentage of voting
rights held: 49.19%)(2) Number of shares acquired

236,418,918 (number of voting rights: 2,364,189)(3) Number of shares held after

372,418,918 (number of voting rights: 3,724,189, percentage of votingchangerights held: 72.61%)

5. Impact on earnings
The Company believes that this underwriting will have a minimal impact on the Company’s
consolidated earnings, but if it is newly revealed that it will have a significant impact on earnings, theCompany will promptly notify this.

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