ENGLISH TRANSLATION FOR REFERENCE PURPOSE ONLYThis notice is an English translation of the original Japanese text of the timely disclosure statement dated February
13, 2024 jointly issued by Daio Paper Corporation and Hokuetsu Corporation, and is for reference purposes only.
In the event of any discrepancy between the original Japanese text and this English translation, the Japanese text
shall prevail.
February 13, 2024
To whom it may concern:
Name of Company:
Daio Paper Corporation
Name of Representative: Yorifusa Wakabayashi
President and Representative Director Chief Executive Officer
Securities Code:3880 (Prime Market of Tokyo Stock Exchange)
Inquiries:
Shuhei Shinagawa
Director and General Manager of Corporate Planning Division
Telephone No.:

+81 3 6856 7500

Name of Company:
Hokuetsu Corporation
Name of Representative: Sekio Kishimoto
President and Chief Executive Officer
Securities Code:3865 (Prime Market of Tokyo Stock Exchange)
Inquiries:
Makoto Yanagisawa
Director and Chief Financial Officer
Telephone No.:

+81 3 3245 4500

Notice of the Commencement of Discussions for a Strategic Business Alliance between Daio Paper
Corporation and Hokuetsu Corporation

Daio Paper Corporation (hereinafter "Daio Paper") and Hokuetsu Corporation (hereinafter "Hokuetsu”) haveagreed today to begin concrete discussions toward forming a strategic business alliance (the "Business Alliance") toresolve management issues faced by both companies and to further enhance their corporate value amid the severebusiness environment surrounding the pulp and paper industry.

1. Background and Significance of the Business Alliance
Daio Paper and Hokuetsu are paper manufacturers that have worked to coexist with local communities through"monozukuri" (manufacturing) respectively, and will continue to aim to be trusted by all stakeholders ranging fromcustomers to shareholders, business partners, local communities, and employees.
The two companies share the recognition that sharpening competitiveness through structural reforms at core mills
and reforming their business portfolios are critical management issues amid a severe business environment that
requires solutions to social issues, such as the 2024 problem in domestic logistics and measures to reduce
environmental impact, in addition to declining demand for domestic paper such as printing and communication paper,changing demand structures, and continuing high prices for raw materials and fuel, including wood chips, coal, andheavy oil.

-1-We agreed on the idea that, rather than each company taking measures individually to address these issues, it would
produce more rapid effects if both companies join hands in reforming the structure and bolstering the revenue base;we will begin to consider specific measures with an eye toward forming the Business Alliance.

Through the Business Alliance, the two companies will maintain their independence and healthy competitive
relationship while proactively considering initiatives that will contribute to the medium- to long-term enhancementof their respective corporate value, such as complementing each other by leveraging their respective strengths.

2. Background Leading to the Commencement of Discussions for the Business Alliance
Daio Paper and Hokuetsu had exchanged opinions, including meetings between top management, to improve therelationship between the two companies. In September 2023, we signed a confidentiality agreement and haveconducted a series of preliminary studies and discussions at the subcommittee level on such initiatives as "production
technology," "raw material purchasing," and “products logistics.”
The two companies will hold discussions with the aim of signing an agreement on the Business Alliance aroundMay of this year.

3. Main Themes of the Business Alliance
The main target areas of the Business Alliance at present are as follows: While respecting the relationship withexisting business partners, we will continue to study and verify the feasibility and effectiveness of each measurethrough subcommittees.
(1) Production Technology
・ Technical cooperation to improve productivity and quality of pulp and paper, and to reduce costs
・ Establishment of cooperative production systems, including OEM (paper, base paper for corrugatedcontainerboard, etc.)
・ Sharing and mutual utilization of idle and spare articles
・ Reduction of maintenance costs through information exchange on machine repair and equipment
maintenance・ Information sharing on factory operations (health and safety, mill DX, technology succession, etc.)(2) Raw Material Purchasing
・ Increasing efficiency of procurement processes of various raw materials (response to BCP, CO2 reduction,etc.)
・ Establishment of a cooperative system for wood chip procurement
・ Mutually accommodating pulp manufactured in-house and various raw materials
・ Sharing know-how on overseas afforestation projects(3) Products Logistics
・ Improving cross distribution by utilizing the logistics networks of both company groups
・ Round transportation between production sites of both companies
・ Promoting modal shift through effective use of containers
・ Mutual utilization of distribution warehouses and joint delivery-2-

Further, in the mid- to long-term, we will also consider joint research on various themes, including newtechnologies, energy conversion, DX promotion, and forest resource utilization.

4. Overview of the Companies (as of March 31, 2023)
Daio Paper Corporation(1)

Location
Representative’s
name/post
Business details
CapitalEstablished

Iidabashi Grand Bloom, 10-2, Fujimi 2 chome, Chiyoda-ku, Tokyo
Yorifusa Wakabayashi, President and Representative Director Chief Executive(2)
Officer(3)
Manufacture and sale of paper, paperboard, and household paper products(4)53,884 million yen(5)
May 5, 1943
Hokuetsu Corporation
24.8%
The Master Trust Bank of Japan, Ltd. (Trust Account)
7.4%
Daio Kaiun Co., Ltd
5.0%
Custody Bank of Japan, Ltd. (Trust Account)
4.3%
Major Shareholders
The Iyo Bank, Ltd.
4.2%
(6)
and Shareholding
The Ehime Bank, Ltd.
4.1%
Ratio
Ehime Paper Manufacturing Co. Ltd
3.2%
Kami Shoji Co. Ltd.
2.8%
OASIS JAPAN STRATEGIC FUND LTD.
2.8%
The Norinchukin Bank
2.5%
CapitalDaio Paper‛s shareholding ratio in Hokuetsu’s common
Relationshipstock as of March 31st, 2023 is 1.4%.
Business
Not Applicable
Relationship between Relationship(7)
Daio Paper andPersonnel
Not Applicable
Hokuetsu
Relationship
Status of
Hokuetsu is Daio Paper‛s Other Affiliated Company.
Relationship withRelated Parties(8)
Daio Paper’s consolidated operating results and consolidated financial positions for the last three years
Fiscal year ended
Fiscal year ended
Fiscal year ended
As of / Fiscal year ended
March 2021
March 2022
March 2023
Consolidated net assets
246,788 million yen
266,704 million yen
244,670 million yen
Consolidated total assets
849,801 million yen
840,441 million yen
923,531 million yen
Consolidated net assets per
1,440.33 yen
1,561.52 yen
1,414.73 yen
shareConsolidated net sales
Consolidated operating profit
Consolidated ordinary profit
Profit attributable to owners ofparentConsolidated earnings per share
Dividends per share

562,928 million yen
36,873 million yen
34,478 million yen

612,314 million yen
37,569 million yen
37,696 million yen

646,213 million yen△21,441 million yen△24,050 million yen

22,115 million yen

23,721 million yen△34,705 million yen

138.73 yen
17.00 yen

142.91 yen
22.00 yen△209.01 yen
16.00 yen

(Note) Shareholding ratio does not include treasury stock (excluding the shares held by trust bank as Trust for
Delivery of Shares and Employee Stock Ownership Plan Trust).
Hokuetsu Corporation(1)(2)(3)(4)(5)(6)

Location
Representative’s
name/post
Business details
CapitalEstablished3-5-1 Nishi-Zao, Nagaoka City, Niigata
Sekio Kishimoto, President and CEO
Manufacture and sale of paper and pulp products
42,020 million yen
April 27, 1907
Misuga Kaiun Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust Account)
-3-

11.2%
7.9%

MLI FOR CLIENT GENERAL OMNI NON COLLATERAL
7.1%
NON TREATY-PB
Daishi Hokuetsu Bank, Ltd.
4.9%
Hokuetsu Corporation’s Agent Stockholding
4.1%
Major Shareholders
NOMURA CUSTODY NOMINEES LIMITED OMNIBUS3.8%and Shareholding
FULLY PAID (CASHPB)
Ratio
Sumitomo Realty & Development Co., Ltd.
3.6%
CGML PB CLIENT ACCOUNT/COLLATERAL
3.6%
OASIS JAPAN STRATEGIC FUND LTD.
3.3%
Custody Bank of Japan, Ltd. (Trust Account)
2.9%
CapitalHokuetsu‛s shareholding ratio in Daio Paper's common
Relationshipstock as of March 31st, 2023 is 24.8%.
Business
Not Applicable
Relationship
Relationship between(7)
Hokuetsu and Daio
Personnel
Not ApplicablePaper
Relationship
Status ofDaio Paper is Hokuetsu‛s Affiliated Company accounted
Relationship withfor by the equity method.
Related Parties(8)
Hokuetsu’s consolidated operating results and consolidated financial positions for the last three years
Fiscal year ended
Fiscal year ended
Fiscal year ended
As of / Fiscal year ended
March 2021
March 2022
March 2023
Consolidated net assets
195,419 million yen
216,974 million yen
225,950 million yen
Consolidated total assets
363,075 million yen
376,956 million yen
388,444 million yen
Consolidated net assets per share
1,159.49 yen
1,286.82 yen1,339.89 yen
Consolidated net sales
222,454 million yen
261,616 million yen
301,204 million yen
Consolidated operating profit
1,701 million yen
20,456 million yen
17,288 million yen
Consolidated ordinary profit
9,756 million yen
29,514 million yen
11,471 million yen
Profit attributable to owners ofparent
Consolidated earnings per shareDividends per share

14,172 million yen

21,206 million yen

8,325 million yen

84.40 yen
14.00 yen

126.22 yen
24.00 yen

49.54 yen
18.00 yen

(Note) Shareholding ratio does not include treasury stock.
5.

Future Outlook
We will examine and verify the impact of the Business Alliance on the respective companies’ businessperformance for the next fiscal year and beyond, but we believe that it will contribute to the enhancement of bothcompanies’ value in the medium to long term. If any matters arise that should be announced in the future, we will
disclose them promptly.

(END)-4-