PRESS RELEASE
March 15, 2024
Name of Company: Hokuetsu Corporation
Name of Representative: Sekio Kishimoto, President and CEO(Securities Code: 3865 (Prime Market of Tokyo Stock Exchange))
Inquiries: Yoshiharu Togawa, General Manager, Public Relations Office
TEL: +81 3-3245-4500
Notice of Change in Consolidated Subsidiary (Partial Transfer of Shares)
Hokuetsu Corporation hereby announces that at the Board of Directors meeting held on March 15, 2024, it wasdecided to transfer 90% of the shares (hereinafter “the Share Transfer”) of the Company’s consolidated subsidiary,
Xing Hui Investment Holdings Co., Ltd. (Hong Kong, China), to W. R. Fibers (Hong Kong) International
Holdings Limited (Hong Kong, China). The details are as follows.
Due to the Share Transfer, Xing Hui Investment Holdings Co., Ltd. and its wholly owned subsidiary Jiangmen
Xinghui Paper Mill Co., Ltd. (Guangdong Province, China) will no longer be subsidiaries of the Company.

1. Reasons for the Share Transfer
In April last year, the Hokuetsu Group launched its “Medium-term Management Plan 2026” as the second step
toward the realization of our Long-Term Corporate Vision “Vision 2030.” In addition to setting numerical targets,
including consolidated net sales of 330 billion yen, we are promoting business activities to further enhance
corporate value based on three basic policies: “Shift Business Portfolio,” “Strengthen Competitiveness,” and“Promote Sustainability (ESG) Activities.”
Jiangmen Xinghui Paper Mill Co., Ltd., a wholly owned subsidiary of Xing Hui Investment Holdings Co., Ltd.,
has been manufacturing and selling white paperboard in Jiangmen City, Guangdong Province since 2015.
However, since the global spread of COVID-19, the company’s performance has continued to be below theplanned level due to the delayed recovery in economic activities. As a result of comprehensive consideration of
the outlook for the future business environment and other factors, we came to the conclusion that it is desirable
to collaborate with W. R. Fibers (Hong Kong) International Holdings Limited, which is well-versed in the Chinese
paper industry, and have decided on the Share Transfer.
Furthermore, the Share Transfer is in line with “Shift Business Portfolio,” one of the basic policies of the“Medium-term Management Plan 2026,” and will contribute to the enhancement of the corporate value of ourGroup.

2. Outline of the Subsidiary and Sub-Subsidiary Subject to the Share Transfer(1) Outline of the Corresponding Subsidiary (Xing Hui Investment Holdings Co., Ltd.)
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(1)

Name

(2)

Address(3)

Xing Hui Investment Holdings Co., Ltd.
Room 315-316 & 318 3/F., Park Fook Industrial Building, No.615-617 Tai
Nan West Street, Lai Chi Kok, Kowloon, Hong Kong

Name and title ofrepresentative

Makoto Yanagisawa, Chairman
Management of Chinese white paperboard manufacturing and sales(4)

Business content(5)Capital237 million USD(6)Date of establishment

June 13, 2011(7)(8)

Major shareholder andshareholding ratio

company

Hokuetsu Corporation, 100%
CapitalThe Company owns 100% of the shares of therelationshipcorresponding subsidiary.

Relationship between

Personnel

One of the Company’s officers concurrently serves as an

the Company and therelationshipofficer of the corresponding subsidiary.

subsidiaryBusinessrelationship(9)

There is a business relationship between the Company
and the corresponding subsidiary in the form of a loan offunds.

Operating results and financial position of the corresponding subsidiary for the past three years
Accounting period

Net assets

Fiscal year ended

Fiscal year ended

Fiscal year ended

December 31, 2020

December 31, 2021

December 31, 2022

-66,539 thousand USD-74,388 thousand

55,494 thousand USD

USD

Total assets

74,528 thousand USD

66,653 thousand USD

73,594 thousand USD

Net sales---Net profit

132 thousand USD-7,849 thousand USD-5,116 thousand USD(2) Outline of the Corresponding Sub-Subsidiary (Jiangmen Xinghui Paper Mill Co., Ltd.)
(1)

Name

(2)

Address(3)

Name and title ofrepresentative

Jiangmen Xinghui Paper Mill Co., Ltd.
Guangdong Yinzhouhu Paper Industry Base Area A, Shuangshui Town,
Xinhui District, Jiangmen City, Guangdong Province
Satoshi Okamoto, Chairman(4)

Business content

Manufacture and sale of white paperboard(5)

Capital

236 million USD(6)Date of establishment

October 25, 2011

(7)
(8)

Major shareholder andshareholding ratio
Relationship between

Xing Hui Investment Holdings Co., Ltd., 100%
CapitalThe Company’s subsidiary, Xing Hui Investment2

the Company and therelationshipsub-subsidiary

Holdings Co., Ltd., owns 100% of the shares of thecorresponding sub-subsidiary.

Personnel

One of the Company’s officers concurrently serves as anrelationshipofficer of the corresponding sub-subsidiary.
There is a business relationship between the CompanyBusinessand the corresponding sub-subsidiary in the form of a loan

relationshipof funds. The business relationship is scheduled to beterminated upon the Share Transfer.

(9)

Operating results and financial position of the corresponding sub-subsidiary for the past three years
Accounting period

Net assets

Total assets

Net sales

Net profit

Fiscal year ended

Fiscal year ended

Fiscal year ended

December 31, 2020

December 31, 2021

December 31, 2022

268,417 thousand yuan

165,408 thousand

310,863 thousand yuan

yuan
679,012 thousand yuan

592,947 thousand

451,103 thousand yuan

yuan
801,559 thousand yuan

876,293 thousand

613,667 thousand yuan

yuan
46,079 thousand yuan

-103,009 thousand-137,431 thousand

yuan

yuan

3. Outline of the Counterparty to the Share Transfer(1)

Name(2)

Address(3)

Name and title ofW. R. Fibers (Hong Kong) International Holdings Limited
Units A & B, 15/F, Neich Tower, 128 Gloucester Road, Wanchai, HongKongWu Minghua, Chairman

representative(4)

Business content

Used paper recycling business(5)

Capital4 million USD(6)Date of establishment

July 17, 2012

Major shareholder andWu Minghua, 100%

(7)

shareholding ratio
CapitalNo applicable items.

relationship
Personnel(8)Relationship between

relationship

the Company and theBusinesscounterparty company

relationshipApplicablestatus ofNo applicable items.

No applicable items.

No applicable items.

related parties34. Number of Shares Transferred, Transfer Price, and Status of Shares Held Before and After Transfer
(1)

(2)

(3)

Number of shares held
before transfer
Number of sharestransferred
Number of shares held
after transfer

934,500,000 shares (ownership ratio of voting rights: 100.0%)

854,550,000 shares

79,950,000 shares (ownership ratio of voting rights: 10.0%)*The transfer price will not be disclosed based on the confidentiality obligation in the transfer agreement withthe transfer counterparty.

5. Schedule(1)

Date of resolution by
the Board of Directors(2)

Date of agreement(3)

Execution date of sharetransfer

March 15, 2024
March 15, 2024
March 31, 2024 (planned)

6. Future Outlook
Please refer to the “Notice of Recording of Extraordinary Losses and Revision of Earnings Forecasts” disclosed
at the same time today for the impact of the Share Transfer and other aspects on the consolidated business results.

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