ETIC to Provide Support to Yamamoto Academy Group
March 29th 2012
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”), has decided to provide
support to Yamamoto Academy Group 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 company concerned
Yamamoto Academy Group (hereafter “Yamamoto Academy”)
2. Name of financial institution jointly applying for rehabilitation support with YamamotoAcademy
Ehime Shinkin Bank (hereafter “Ehime Shinkin”)
3. Outline of business revitalization plan
Please see appendix.
4. Comments from State Ministers in charge of ETIC
Prime Minister, 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
Yamamoto Academy. However, I ask that after reaching the decision to support, ETIC
should encourage Yamamoto Academy to discuss the situation with employees of thecompany as soon as possible. I also ask that in advising on and guiding theimplementation of the corporate revitalization plan, ETIC should aim to ensure thatYamamoto Academy complies with related laws and regulations, and that Yamamoto
Academy also provides adequate opportunities for substantive discussions with theworkforce with due consideration of employment stability and other such factors.”
5. Comment from state minister supervising business activities
Minister of Education, Culture, Sports, Science and Technology: “In implementing therevitalization plan, I ask that due consideration is given to the opinion of the Governor ofEhime Prefecture, the regional authority for this area, and that efforts are made toreinforce management foundations to ensure that high quality education continue to bedelivered to students.”
6. Debt purchase application period
From Thursday, March 29th, 2012 for receipt by ETIC no later than Friday, May 18 th,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 financial support andfinancial adjustment from financial institutions providing loans to Yamamoto Academy.
No request for support will be made 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.
9.1 Rationale
Yamamoto Academy is Ehime Prefecture‟s second largest incorporated educational
institution with a history dating back 66 years, and operates five specialized training
academies in Matsuyama city. Yamamoto Academy provides educational services toover 400 students, including minors, and acts as a provider of both education andemployment in Ehime Prefecture. The over 10,000 graduates who have studied andattained qualifications with Yamamoto Academy are now contributing to the regional
economy. Business failure of Yamamoto Academy would have a significant financial andeducational effect on the families of current students and students planning to enroll.
The employment of current teaching staff will be secured by supporting the revitalizationof Yamamoto Academy. It can be said that Yamamoto Academies possesses sufficientbusiness resources in that it employs a sufficient number of regional educational staffs
necessary to maintain and develop the functions of a specialized training college, it
owns facilities located in a highly convenient location in central Matsuyama city, is in anadvantageous position to secure student enrolment, and its campus facilities areexpected to be suitable for continued use over the medium term.
Supporting the revitalization of Yamamoto Academy provides one future direction in theevent of revitalizing other incorporated educational institutions. While there may besome difficulty coordinating with the highly diverse stakeholders, by taking on the role ofcoordinator among related parties, ETIC aims to contribute to solving problems faced in
the revitalization of incorporated educational institutions.

9.2 Role of ETICIn deciding to support Yamamoto Academy, ETIC‟s planned role is as follows:(1) Act as a coordinator among the financial institutions and other parties involved(including debt purchase).
(2) Supply management personnel.
With regard to (1) above, ETIC will reduce excessive interest-bearing debt and improve
the financial condition of Yamamoto Academy by requesting financial support fromfinancial institutional creditors. With regard to (2), ETIC will place management staff
within the organization to strengthen its management structure to support the stable
progression of the business revitalization plan.
EITC will not conduct financing or capital injection in this particular scheme.
EndsAppendix: Outline of the Business Revitalization PlanSection 1: Overview of the group receiving support
1.1 Names of group
Yamamoto Academy Group
1.2 Main Business
Operation of specialized training colleges
1.3 Main schools and facilities(1) Head office and main campus
1-4-1 Ichibancho, Matsuyama City, Ehime Prefecture(2) Branch campus
1-33 Tsujimachi, Matsuyama City, Ehime Prefecture
1.4 Number of employees
Directors: 7
Full-time staff: 39
Part-time staff: 5
1.5 Labor unionNone
1.6 Main banks
Ehime Shinkin Bank
1.7 Financial overview (financial results for year ended March 31, 2011)
Income¥348 million

Operating loss

¥168 million

Section 2: Background and circumstances leading to request for ETIC support
From a business standpoint, Yamamoto Academy‟s costs increased due to excessive
investments in advertising and promotion to attract more students, following atemporary decline in students resulting from a dispute between instructors. However it
failed to reach its enrolment target and experienced a significant downturn in profit as aresult. In recent years student numbers have begun to increase, and with student
numbers expected to be maintained, Yamamoto Academy has reached a stage where it
can begin to make a recovery.
From a financial standpoint, in addition to the aforementioned increase in student
acquisition costs arising from its strategies to expand student numbers, as a result ofcontinued reliance on loans for cash flow, and impacted by the delay in overhauling its

current high-cost structure, there have been no fundamental improvements toYamamoto Academy‟s financial condition.
In terms of management and organization, the board of directors who oversee themanagement of Yamamoto Academy were unable to achieve the objectives of thebusiness plan that they created themselves, and in addition to the financial situation,
the failure to revise the business plan was also a factor contributing to the current
situation.
Given the circumstances, Yamamoto Academy, after discussions with Ehime Shinkin,
resolved to apply for support from ETIC with the aim of implementing business
revitalization by utilizing its management resources, including the high-quality
specialized education provided by regional educational staff, its highly convenient
central city location, and sound building facilities that should be suitable for continued
use over the medium term.

Section 3: Outline of business revitalization plan
1. Basic policy
Yamamoto Academy has a long history and tradition, and is strongly supported by its
graduates. Accordingly, with a basic policy of adopting “a robust and uniquemanagement style”, Yamamoto Academy will work to achieve drastic improvements inprofitability and continue the stable operation of the academy, focusing on “minimalistmanagement” and “value differentiation”. Details are as follows:(1) Minimalist management
Adjustments will be made to labor costs and fixed costs, and cost control systems
will be strengthened so that Yamamoto Academy can shift away from its current
high-cost structure, one of the factors contributing to the current situation. Revisions
will be made to other such contributing factors including the current management
methods and control systems, particularly its low cost/performance student
expansion strategy. A system will be established which will enable the introductionof functions to formulate and revise business plans, while a clear control system willbe established to evaluate measures for projects and initiatives, and appropriate
adjustments will be made to budget allocation.
(2) Value differentiation
Yamamoto Academy is presently holding a discount campaign based on its current

student acquisition plan and it is struggling with strong price competition from rivals.
Yamamoto Academy will shift away from competing on price and work to diversify
itself by enhancing the appeal of its schools, including setting targets which utilize
traditionally strong areas, establishing educational departments, improving thequality of education provided, and providing career support.
2. Structure(1)

Financial support and financial adjustment scheme
Related financial institutions will implement financial support and financial
adjustment following the decision by ETIC to purchase debt.

(2)

Request for financial support
Of the ¥1.7 billion owed to financial institutions by Yamamoto Academy, financial
support of approximately ¥1.1 billion will be requested from financial institutions.

(3)

Financing
Following financial support and financial adjustment by financial institutions, debt
that can be borne by Yamamoto Academy will be repaid with long-term revenue.
Financing of the business is expected to be sufficient, provided that financial support
is received in line with the business revitalization plan, along with planned additional
financing from Ehime Shinkin for necessary operating cash flow.

Section 4. Conformance with standards for support
1. Main clauses in standards for support
1.1 Possession of effective management resources
Yamamoto Academy is an incorporated educational institution that operates thesecond largest specialized training college in Ehime Prefecture. Yamamoto Academy
possesses effective management resources including high quality specialized
education provided by regional educational staff, a highly convenient central city
location, and campus facilities suitable for continued use over the medium term.
1.2 Excessive indebtedness
Yamamoto Academy carries an excessive amount of debt compared to its revenues.
Debt forgiveness and financial support are essential to the revitalization of Yamamoto
Academy.
2. Standards relating to decision to support
2.1 Agreement of main creditors

The application by Yamamoto Academy was made jointly with main creditor, Ehime
Shinkin.
2.2 Standards for productivity improvement
Successful implementation of this business revitalization plan is expected to enable
Yamamoto Academy to meet the required standards with respect to productivity.
2.3 Standards for financial soundness
Successful implementation of this business revitalization plan is expected to enable
Yamamoto Academy to meet the required standards with respect to financial
soundness.
2.4 Comparison with liquidation value
The value of Yamamoto Academy available through implementation of the business
revitalization plan is estimated to be greater than the value available through debt
recovery on bankruptcy proceedings.
2.5 Potential to refinance within three years
Implementation of the business revitalization plan is expected to significantly improve
the financial condition of Yamamoto Academy, enabling it to achieve stable cash flows
and making refinancing of debt purchased by ETIC possible within 3 years throughthe involvement of regional financial institutions.
2.6 Connection with structural oversupply
Implementation of the business revitalization plan will not increase the supply capacityof Yamamoto Academy. Accordingly, the plan has been judged as „not hindering theresolution of structural oversupply‟ with reference to Article 19 of the Act on Special
Measures for Industrial Revitalization and Industrial Innovation.
2.7 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 otheraspects of the business revitalization plan.

Section 5: Responsibility of management

The responsibility of the former management team for the current predicament of Yamamoto
Academy will be reflected through the resignation of all directors from their posts directly
following the decision to provide support, with the exception of a small number of directors
who are required for the revitalization of the academy, and are not responsible or areminimally responsible for the financial downturn of the academy. These selected directors
shall retain their positions.
Ends