MITSUBA Corporation
Supplementary Information on
Capital Policy(Securities Code: 7280)

Friday, May 10, 2024

Points of Capital Policy

11/13

Acquisition and Cancellation of the Existing Class Stocks*1➢

Achieve management improvement and strengthen the earnings and financial structure through theallocation of class stocks to JIS*2 and the formulation and steady implementation of the current
Medium-Term Management Plan that takes into account the subsequent major changes in thebusiness environment➢ Implement management independently by using internal reserves for Acquisition andCancellation of the Existing Class Stocks for the purpose of reducing the risk of potential equitydilution

2

Issuance of new class stocks➢

Newly issue class stocks to be allocated to the Development Bank of Japan and Bank of Yokohama,
which are our trading financial institutions, in order to promptly stabilize the financial position andraise funds for investment in growth areas toward achieving the MITSUBA Vision 2030
➢ New class stocks are designed to reduce the risk of potential equity dilution and to have noredemption factor compared to the Existing Class Stocks*1 Of the Class A stock (total amount: 15 billion yen) issued on September 30, 2020, the outstanding balance (10 billion yen) and Class C stock (total amount: 5 billion yen)
*2 Abbreviation for Japan Industrial Solutions No. II (and its general partner, Japan Industrial Solutions Co., Ltd.) to which the Existing Class Stocks are allottedBackground of Capital Policy- Strengthening Earnings and Financial Structure -2/13

Realize FCF to be positive through the allocation of class stocks to JIS and the formulation andsteady implementation of the current Medium-Term Management Plan that takes into account thesubsequent major changes in the business environment
Negative FCF◼
◼
◼
◼

Sales expansion
Intensification of pricecompetitiveness
Increase in capital expenditures
Decline in cost competitivenessTo positive FCF
◼
◼

◼
◼

73rd term

74th term

75th term

76th term◼

The 11th Medium-Term
Management Plan
FY17-FY19“Selection and Concentration” ofbusiness
Base reorganization throughstructural reform (in Japan, theAmericas and Europe)
Optimization of overhead personnel
in Japan and overseas
Voluntary retirement in Japan andoverseas including affiliatedcompanies

77th term

78th term

Sophistication of business
management- Monitoring system (review ofmeeting structure)- Priority management measures(stricter inventory and investment
management) and so on

The 12th Medium-Term
Management Plan
FY20-FY22

Improving financial healthResponding to the evolution of mobility◼
◼

Realization ofMITSUBA Vision 2030

Continuing the measures of the 12th Medium-Term
Management Plan
New measures under the Medium-Term Management Plan
(FY23-FY27)- Global quality cost optimization- Sophistication of PSI (production, sales and inventory)
management- Realizing strategic alliances- Development of new markets among OEMs in China andIndia

FCF stabilization

79th term◼

80th term

81st term 82nd term 83rd term

84th term

85th term

86th term

Realize independent management while continuing thesophisticated business management even during the period of
the 12th Medium-Term Management Plan

Current Medium-Term Management Plan
FY23-FY27 (5 years)

Next Medium-Term
Management Plan
FY28-

Background of Capital Policy- Strengthening Earnings and Financial Structure -3/13

With the business structure reforms being promoted, current shareholders’ equity has improved to75.4 billion yen and the equity ratio has improved to 21.2%, showing certain results inimproving financial soundness
Changes in Shareholders’ Equity and Equity Ratio
Capital increase
through issuance ofclass stocks
65.3(Unit: Billions of yen, %)

80.0
70.0

70.0
20.8%

61.0
60.0

Shareholder's equity

65.1

75.4
21.1%

59.0

18.2%

19.0%
50.0

Equity ratio

19.0%

45.4

25.0%

20.0%

18.0%
15.0%

14.5%
40.0
10.0%

30.0
20.0

5.0%
10.0
0.0

0.0%

FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

Background of Capital Policy- Changes in the Status of Existing Class Stocks -4/13

JIS transfer restrictions have already been lifted for the Existing Class Stocks, and the put
option using the common stock as consideration can be exercised, so they were acquired
and retired using internal reserves as the source
Expressions in red indicate changes since the issuance

Issue amountTransfer restrictions
Acquisition clause(MITSUBA’s right)
Consideration

Put option(Rights ofConversion toJIS)
common stock
Maximum dilution rate

Class A stock

Class C stock(Reference) Class B stock

15 billion yen
10 billion yen due to partial
redemption

5 billion yen(Unissued)

None*1
Release of transfer restrictions effective from May 10, 2023

NoneClass stocks can be redeemed at any time from the issue date
• Common stock• Money + Class B stock• Common stock

Limiting the period during which shareholders can exercise
their put option against MITSUBA*2
From May 10, 2023, put option may be exercised
Approximately 85.96%*357.31% due to partial
redemption

Approximately 28.65%*3• Common stock
No conversion limit

Approximately 13.75%*3*1 Under the underwriting agreement, approval by the Board of Directors is required for the transfer to a third party by June 30, 2024. Transfer restrictions are lifted in certain cases*2 Exercisable if grounds for lifting conversion restriction occur*3 The dilution rate is based on the assumption that neither the amount equivalent to cumulative unpaid dividends nor the daily unpaid preferred dividend amount exists

Background of Capital Policy- Need for Capital Funds -5/13

Recognize the need to raise capital funds of 10 billion yen worth in order to continue to realize
a stable capital structure for achieving the MITSUBA Vision 2030, although the Existing ClassStocks is to be redeemed
Details of Changes in Shareholders’ Equity
Equity ratioEquity ratio

21.4%

19.0%

FY19*1*2*3*4

Existing ClassStocks

After the Issuanceof Class Stocks*1*1

Profit for thePeriod FY20 toFY22

Profit for FY23

PreferredDividend for*2Redemption ofClass Stocks*2

Relevant ClassStocks

Profit for FY24*3*3

4
Others**4

FY24(Forecast)

Figures before reflecting financial results for the fiscal year ended March 31, 2021
The amount of redemption of and preferred dividend of the class stocks is the total value of the redemption amount after taking into account the cumulative dividend and redemption factor
Profit for FY24 is based on the forecast for fiscal year 2024
In addition to general dividends and dividends to non-controlling shareholders, the impact of changes in stockholders’ equity due to the application of Turkish inflation accounting, etc.

Background of Capital Policy- Consideration of Procurement Method -6/13

Select third-party allotment of class stocks based on whether the stocks will be diluted and thecertainty of the procurement amountPublic Offering andThird-Party Allotment ofCommon Stock

Gratis Allotment ofStock Acquisition Rights,
Shareholder Allotment, andEquity Commitment Line (ECL)

Even after the necessary amount israised, there will be no dilution of thecommon stock (unless the put option
the consideration for which is thecommon stock is exercised)

In order to raise the necessaryamount, immediate and appropriate
dilution of the common stock will
occur(For ECL)
To raise the required amount, there
will be a dilution of common stock ofa reasonable size, albeit in stages

Regardless of the stock price level, it
is possible to securely raise funds byleveraging MITSUBA’s
creditworthiness

Procurement amount fluctuates
depending on the stock price levelIn addition to changes in the amountof funding depending on the stock
price, the amount raised depends on
the judgment of the allottedshareholders

Dilution ornon-dilution
Certainty ofprocurement amountConsiderations

Third Party Allotment ofClass Stocks7/13

Overview of the Relevant Class Stocks

Reduce the risk of potential equity dilution by limiting conversion to the common stock unless it
conflicts with financial covenants
Class D stock

PurposeStabilizing financial structure and capital expenditures in growth areas

Assignee

Development Bank of Japan and Bank of Yokohama

Issue amount

10 billion yenVoting rights

None

Transfer restrictions

Yes

Preferred dividend rate

7.8% (cumulative and non-participatory)

Acquisition clause(MITSUBA’s right)

Redeemable at any time after one year from the date of issue(Reduction of dilution by conversion to common stock)

Put option(Rights ofshareholders)Consideration

Money and common stock

Conversion tocommon stock

Six months after the put option the consideration for which is a cash payment due toa conflict of financial covenants has become exercisable(Reduce early dilution)

Conversion price

Initially 1,344 yen, revise every six months thereafter (market value x 95%)

Minimum conversion value andmaximum dilution rate

708 yen (Closing price on May 9, 2024 × 50%) • 31.59% *1(Further, the dilution rate is reduced because the conversion price increases
during the period of stock price appreciation)*1 Calculated based on the initial conversion price. The dilution rate is based on the assumption that neither the amount equivalent to cumulative unpaid dividends nor the daily
unpaid preferred dividend amount exists

8/13

Overview of Financial Covenants (1/2)
Descriptions

Reasons forexercising the put
option with cash
consideration



If June 27, 2029 (5 years from the payment date) has passed

If the distributable amount of surplus on the non-consolidated balance sheet as of the last day of March 2025 andthe last day of each business year thereafter is less than or equal to the total of the compulsory redemption value*1
under the assumption that all of the Preferred Stocks at that time have been subject to compulsory redemption withthe last day of the relevant business year as the compulsory redemption dateIf the amount of shareholders’ equity*2 in the consolidated balance sheet as of the last day of March 2025 and thelast day of each business year thereafter is less than 75% of the amount of shareholders’ equity in the consolidatedbalance sheet as of the last day of the business year that ended immediately before or the last day of March 2024,
whichever is larger



If the profit (loss) in the consolidated statement of income as of the end of March 2025 and the end of eachbusiness year thereafter is in the red for two consecutive business years

If it is discovered that the preconditions for payment have not been fulfilled on the payment date (unless, however,the underwriter waives in writing all preconditions that are not fulfilled.)

If the issuing company violates the stock investment contract and the violation is not cured for 30 days from thereceipt of the notice from the underwriter indicating the fact*3*1 “Compulsory Redemption Value” means the amount used as the basis for calculating the consideration or distribution amount in each phase of put option, acquisition claims,
acquisition clauses and distribution of residual assets, which is calculated based on the following concepts: The total amount of consideration (including preferred dividends)
to be paid to preferred shareholders is intended to substantially be an amount calculated by compounding the paid-in amount with the preferred dividend rate. That is, theamount obtained by deducting “the amount equivalent to paid preferred dividends (amount adjusted by applying the preferred dividend rate and calculating compound interestfor the period from the payment date to the acquisition date)” from “the amount calculated by applying the preferred dividend rate and calculating compound interest for theperiod from the payment date to the acquisition date for the payment amount.”*2 Calculated as the amount obtained by subtracting the amount of “Non-controlling interests” from the amount of “Total net assets” in the net assets section*3 However, in the case of a violation pertaining to a clause involved in the elimination of anti-social forces, or in the case where it is objectively impossible or extremely difficult tocure the violation, the lapse of such a cure period shall not be required

9/13

Overview of Financial Covenants (2/2)
Descriptions

Reasons forexercising the putoption withcommon stockElapse of six months from the date on which the put option the consideration for which is a cash payment arises(including the same day)

If December 27, 2029 (5.5 years from the payment date) has passed
If dividends of surplus pertaining to the Preferred Stock with the last day of each business year as the record datehave never been paid during two business years

If it is discovered that the preconditions for payment have not been fulfilled on the closing date (unless, however,the underwriter waives in writing all preconditions that are not fulfilled.)

If the issuing company violates the stock investment contract and the violation is not cured for 30 days from thereceipt of the notice from the underwriter indicating the fact*1*1 However, in the case of a violation pertaining to a clause involved in the elimination of anti-social forces, or in the case where it is objectively impossible orextremely difficult to cure the violation, the lapse of such a cure period shall not be required10/13Use of Funds from the Relevant Class Stocks

In order to provide high-value-added products that respond to the evolution of mobility, we will
devote funds to next-generation products that will generate future profits, such as thermal
management systems and chassis systems in the automotive business area, and EV drive
systems and life support systems in the motorcycle business area, and promote resource shifts toour growth portfolio.
Specific use

AmountScheduled spending period

Launch of new products for the automotive market, launchof products for new customers, and introduction of new
machinery and molds and capacity reinforcement to expand
sales to existing customers

7,600 million yen

July 2024 - March 2028

Launch of new products for the motorcycle market,
introduction of new machinery and molds to launch products
for new customers, etc.

2,060 million yen

July 2024 - March 2028

11/13Reference) Business Portfolio Strategy (1/2)
Policies for managing the business portfolio

Automotive MarketLowHigh

Priority of the investment area HighWe will promote the strategic withdrawal andreduction of products whose demand is decreasingor that will not generate cash in the future

Operating marginEngine
accessories

FY27

We will aim for improvements in theprofitability of products whose demand is
expected to remain constant from now on

We will invest cash in businesses that will generatecash in the future and be the pillars ofthe next generation

Thermalmanagement
systems

FY23
FY27

Startermotors

Door openingFY27
and closing

Brush fanmotors

FY27

Brushless fans &shrouds

Chassis systems

FY23

Field-of-visionsystems

Convenienceand comfort

FY27

FY27
FY23

PSD

Electric oil
pump

FY23
Powerwindows

LowLow

FY23(Note) Bubble size: Net sales
The products pictured arerepresentative

BLM forbrake control
WipersFY23

Customer market needs

We will concentrate management
resources to cultivate the pillars of
the next generation that will generate profits

High12/13Reference) Business Portfolio Strategy (2/2)
Motorcycle market

Policies for managing the business portfolio

Priority of the investment area

Low

We will aimfor improvements in theprofitability of products whose demand isexpected to remain constant from now on

LED lightings

Operating margin

High

We will promote the strategic withdrawal andreduction of products whose demand is decreasingor that will not generate cash in the future

LED flasher
lamps

FY27 FY23

Engine accessories

Startermotors

LowLow(Note) Bubble size: Net sales
The products pictured arerepresentative

FY23High

We will invest cash in businesses that will generatecash in the future and be the pillars of
the next generation

FY27

FY27 FY23

EVdrive

Fuelsystems
Fuel pumpmoduleACG
starters

Customer market needs

FY27

Drive systems

FY23 We will concentrate management
resources to cultivate the pillars of
the next generation that will generate profitsHighReference) Comparison of Economic Conditions between
the Existing Class Stocks and the Relevant Class Stocks

13/13

Realize a design that reduces the risk of potential stock dilution and has no redemption factor

Issue amountTransfer restrictions
Acquisition clause(MITSUBA’s right)

Consideration
Put option(Rights ofAllottees) Conversion tocommon stock

Class A stock

Class C stock(Reference) Class B stock

Class D stock

10 billion yen(After considering partialredemption)

5 billion yen(Unissued)

10 billion yen

NoneYesRelease of transfer restrictions effective fromMay 10, 2023*1

Class stocks can be redeemed at any time from the issue date Common stock Money + Class B stock Common stock

Since May 10, 2023, it has been possible to exercise
the put option due to the occurrence of grounds
for conversion restriction cancellation

Redeemable after one yearof issuance Common stock Money Common stock

No conversion limit

After six months from theoccurrence of the put option
with cash consideration*2

Maximum dilution rate

Approximately 57.31%*3(After considering partialredemption)

Approximately 28.65%*3

Approximately 13.75%*3

Approximately 31.59%*3

Redemption factor

1.24*4

1.51*4

1.05

No settingPreferred dividend rate

6.0%

0.0%

8.0%

7.8%

*1 According to the shock investment contract, approval by the Board of Directors is required for transfer to a third party by June 30, 2024. Transfer restrictions are lifted in certain cases.
*2 Exercisable in case of non-payment of preferred dividend for two consecutive years, non-fulfillment of payment prerequisite, or violation of stock investment contract*3 Class D stock Maximum dilution rate is calculated based on the initial conversion price. The dilution rate is based on the assumption that neither the amount equivalent tocumulative unpaid dividends nor the daily unpaid preferred dividend amount exists.
*4 Factor for redemption between July 1, 2023 and June 30, 2024

14/13~ End of Presentation ~