March 18, 2019

To Whom It May Concern:
Company Name:
Representative:

Contact:

Taiyo Nippon Sanso Corporation
Yujiro Ichihara, Representative Director,President CEO(Code: 4091, 1st Section of Tokyo StockExchange)
Hisataka Ose, General Manager
Corporate Communications(TEL: 03-5788-8015)

Notice Regarding Financing through a Subordinated Loan
Taiyo Nippon Sanso Corporation (TNSC) hereby announces that it has concluded an agreement for
financing through a subordinated loan (Loan) after the news release dated December 4, 2018 entitled“Notice Regarding Issue of Hybrid Bonds (Public Subordinated Bonds),” which stated the Company wasdeliberating on the use of hybrid loans for funding. Details are as follows.
Moreover, funding of ¥250 billion through hybrid financing as notified on December 4, 2018 has now
been completed through hybrid bonds (total amount ¥108 billion) and this Loan (total amount ¥142billion).
1. Features of the Loan
The Loan has interim attributes of both assets and liabilities, with its liability aspects ensuring thatstock dilution does not occur. On the other hand, it also has attributes and features resembling assets
such as voluntary deferral of interest, extremely long-term redemption periods and subordination
during liquidation or bankruptcy procedures. As a result, TNSC forecasts receiving recognition from its
rating agencies (Japan Credit Rating Agency, Ltd. and Rating and Investment Information, Inc.) for
50% capital of the procurement amount.
2. Overview of the Loan
(1) Amount of funding(2) Date contractconcluded(3) Effective date(4) Final repayment date(5) Early repayment(6) Assessment of equitycredit(7) Optional suspensionof interest payments(8) Subordination

Tranche A¥75 billion
March 18, 2019

Tranche B¥67 billion

March 22, 2019
March 22, 2056
March 22, 2059
TNSC may repay ahead of schedule interest payment partially or in full following theinterest payment date in March 2024.
“Middle” or “50” (Japan Credit Rating Agency, Ltd.)“Class 3 - Equity Credit 50” (Rating and Investment Information, Inc.)TNSC may defer all or part of the interest payments at its discretion.
Creditors of the Loan have subordinated claim rights subordinate to the superordinate
debt in the event of TNSC entering liquidation, bankruptcy, company reorganization,
civil rehabilitation or similar proceedings not under Japanese law.
Terms of the agreement for the Loan must not be changed to disadvantage any
creditor other than the subordinate creditor.

1(9) Replacement
restrictions

In the case of early repayment of theLoan, TNSC does not intend to conduct
early repayment, etc., unless it raises
funds through a product that a rating
agency assigns the same or higher equity
as the Loan, within the 12 month period
preceding the date of early repayment.
(However, this restriction will not apply
if the date of early repayment, etc., falls
in or after March 2024 and TNSC meetsboth of the requirements of (i) and (ii)below.)
As of the end of the fiscal year
immediately preceding the date of early
repayment, etc., or at the end of any
quarter of that fiscal year and(i) TNSC’s adjusted consolidated net
debt to shareholders’ equity ratio(Note 1) is 1.00x or lower.
(However, early repayment will
only be performed if TNSC’sadjusted consolidated net debt toshareholders’ equity ratio does notexceed 1.00x after payment.)(ii) The amount of consolidated
shareholders’ equity (Note 2) has
increased by ¥175 billion or morecompared with the end of thesecond quarter of the fiscal year
ending March 31, 2019.

(Note 3)

Notes:
1. Adjusted consolidated net debt to shareholders’ equity ratio is obtained by dividing adjusted
consolidated net debt (the total amount of bonds and borrowings less cash and cash equivalents andthe equity credit amount from outstanding hybrid securities issued by March 2019 (defined below))by adjusted consolidated shareholders’ equity (the total amount of consolidated shareholders’ equity
and the equity credit amount from outstanding hybrid securities issued by March 2019). The equity
credit amount is the amount obtained by multiplying the total amount needed for financing by equity
credit approved by rating agencies (displayed as a percentage).
2. Consolidated shareholders’ equity is the total amount of capital stock, capital surplus, treasury sharesand retained earnings on the consolidated balance sheet.
3. TNSC envisages refinancing the Loan for the early repayment of tranche B through products thatrating agencies recognize as equivalent or greater to the Loan. However, TNSC may forgo
refinancing using a product recognized as having equivalent or greater capital provided that TNSC
meets the requirements of (i) and (ii) below:(i) TNSC’s adjusted consolidated net debt to shareholders’ equity ratio is 1.00x or lower. (However,early repayment will only be performed if TNSC’s adjusted consolidated net debt to shareholders’equity ratio does not exceed 1.00x after payment.)(ii) The amount of consolidated shareholders’ equity has increased by ¥250 billion or morecompared with the end of the second quarter of the fiscal year ending March 31, 2019.

This document is intended to announce to the public TSNC’s funding through a subordinated loan (hybrid loan), rather thansolicit investments or perform any similar act.

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