Sanix Incorporated (Ticker: 4651, TSE/OSE/FSE, President & CEO: Shin-ichi Munemasa) resolved at a meeting of its Board of Directors on January 13, 2006 to issue the Companyfs first series of unsecured convertible bonds with stock acquisition rights through a third-party placement.
Details of the bond issue are provided below.
| 1. Name of bond |
| |
Sanix Incorporated, First Series of Unsecured Convertible Bonds with
Stock Acquisition Rights (Limited Inter-Bond Pari Passu Clause) (hereinafter
referred to as the gBonds with Stock Acquisition Rights,h of which the
bonds are to be referred to as the gBondsh and the stock acquisition
rights are to be referred to as the gStock Acquisition Rightsh). |
|
| 2. Issue price |
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\100 per \100 in face value |
|
| 3. Issue price of Stock Acquisition Rights |
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Free |
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| 4. Payment date and date of issue |
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January 30, 2006 |
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5. Particulars of offering
(1) Method of offering |
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The entire amount will be allocated to Shinko Securities Co., Ltd.
by means of a third-party allocation. |
| (2) Subscription period |
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Through January 30, 2006 |
| (3) Venue where subscriptions will be accepted |
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The Bank of Tokyo-Mitsubishi UFJ, Ltd. Main Branch |
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6. Particulars of the Stock Acquisition Rights
(1) Type and number of stock to be issued by Stock Acquisition Rights |
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The type of stock to be issued by the exercise of the Stock Acquisition
Rights shall be the
Companyfs common stock, and the number of such common stock to be
newly issued or transferred in substitution (issuance or transfer of the
Companyfs common stock is to be hereinafter referred to as gdeliveryh)
upon request for such exercise shall be the maximum whole number obtained
by dividing the aggregate issue price of the Bonds by the Conversion Price
defined in (3)(ii) of this Section (if the Conversion Price was amended
or adjusted in accordance with (8) or (9) of this Section, such amended
or adjusted Conversion Price). However, any fraction less than a share
of stock shall be disregarded and no cash adjustment shall be made. |
| (2) Total number of Stock Acquisition Rights to be issued |
|
One Stock Acquisition Right shall be attached to each of the Bonds,
and 40 Stock Acquisition Rights shall be issued in total. |
| (3) Amount payable upon exercise and Conversion Price |
|
| (i) |
The amount to be payable upon exercise of one Stock Acquisition Right
shall be equal to the issue price of the Bonds. |
| (ii) |
The amount payable for one share of stock upon exercise of the Stock
Acquisition Right (hereinafter referred to as the gConversion Priceh)
shall initially be set at \732. |
|
| (4) Rationale for determining the issue price of the Stock
Acquisition Rights as zero and the amount to be paid upon exercise thereof |
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The Stock Acquisition Rights are issued free of charge,
taking into account the close relationship between these Rights and the
Bonds in which these Rights are issued in conjunction with the Bonds and
not are detachable for transfer, and the Bonds shall become void after
being used as substitution for exercise price to be paid if these Rights
are exercised, in line with any economic values involved in the terms and
conditions of the Bonds with Stock Acquisition Rights, such as interest
rate, early redemption and issue price. In addition, since the Bonds with
Stock Acquisition Rights are the convertible bonds with stock acquisition
rights, the amount to be payable upon exercise of one Stock Acquisition
Right was determined as the one equal to the issue price of the Bonds,
and the initial Conversion Price was determined as an amount equal to 105%
of the closing price of the Companyfs common stock on the Tokyo Stock
Exchange on January 13, 2006. |
| (5) Issue price of new stock to be capitalized |
|
The amount to be capitalized from the issue price of one share of the
Companyfs common stock to be issued upon exercise of the Stock Acquisition
Right shall be the amount obtained by multiplying such issue price of such
stock by 0.5, and any fraction less than one yen arising as a result of
such calculation shall be rounded up to the nearest yen. |
| (6) Exercise period for Stock Acquisition Rights |
|
The bondholders of the Bonds with Stock Acquisition Rights are entitled
to request exercise of their Stock Acquisition Rights (hereinafter referred
to as the gRequest for Exerciseh) at any time during the period from
January 31, 2006 through January 29, 2007. |
| (7) Conditions for exercise |
|
If the Bonds shall have been redeemed before maturity at the option
of the Company according to Section 7 (6) (ii) and (iii) or if the Bonds
shall have become due and payable, the Stock Acquisition Rights may not
be exercised on or after the date of such redemption or the date on which
the Bonds become due and payable. If the Company determined to redeem the
Bonds before maturity at the request of the bondholders of the Bonds with
Stock Acquisition Rights in accordance with Section 7 (6) (iv), the Stock
Acquisition Rights may not be exercised from the point at which a written
request is submitted to the place of payment of redemption money as shown
in Section 7(12) (hereinafter referred to as the gPlace of Payment of
Redemption Moneyh).
Moreover, no Stock Acquisition Right may be partially exercised. |
| (8) Revision of Conversion Price |
|
After the third business day of the first Friday of each month (hereinafter,
referred to as gDecision Dateh) following the issuance of the Bonds with
Stock Acquisition Rights, the Conversion Price will be revised (calculation
shall be made to one-tenth of a yen, discarding one-hundredths of a yen,
hereinafter, gDecision Date Valueh) to an amount equivalent to 90% of
the average volume-weighted average price (gVWAPh) of each business day
of the five (5) consecutive business days up to the Decision Date inclusive
(provided, however, that days on which VWAP is not available in connection
with ordinary trading of the Companyfs ordinary stock on the Tokyo Stock
Exchange shall be excluded, and if the Decision Date is not a business
day, five (5) business days on which VWAP is available up to the date immediately
prior to the Decision Date (gMarket Value Calculation Periodh) shall
be applied for calculation.). In the case of occurrence of any event requiring
adjustment of Conversion Price during the Market Value Calculation Period
as provided in paragraph (9) of this Section, the above-mentioned revised
Conversion Price shall be adjusted to such value as the Company considers
appropriate in accordance with the terms and conditions of the Bonds with
Stock Acquisition Rights. Notwithstanding, if the Decision Date Value falls
below 366 yen (gLower Limit Conversion Priceh, subject to adjustment as
provided in paragraph (9) in this Section), the revised Conversion Price
shall be set at the Lower Limit Conversion Price, and if the Decision Date
Value is above 1,464 yen (gUpper Limit Conversion Priceh, subject to adjustment
as provided in paragraph (9) in this Section), the revised Conversion Price
shall be set at the Upper Limit Conversion Price. |
| (9) Adjustment of Conversion Price |
|
The Conversion Price will be adjusted according to the following formula
when the Company delivers its common stock at an issue price or a disposal
price lower than the market price of the Companyfs common stock (except
for the delivery as a result of conversion or exercise of the instruments
to be converted or convertible to the Companyfs common stock or the stock
acquisition rights (including those attached to the bonds with stock acquisition
rights) by which delivery of the Companyfs common stock may be requested,
as the case may be) after issuance of the Bonds with Stock Acquisition
Rights. In the following formula, the gnumber of outstanding sharesh
means the number of the Companyfs common stock outstanding less the number
of treasury common stock owned by the Company. |
|
 |
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The Conversion Price shall also be adjusted as appropriate when the
Companyfs common stock is split or consolidated, or when instruments to
be converted or convertible to the Companyfs common stock at a price less
than the market price or instruments (including bonds with stock acquisition
rights) representing a right to request delivery of the Companyfs common
stock (including stock acquisition rights) are issued. If common stock
is issued through a stock split, the gNumber of shares newly issued or
disposed ofh in the formula above will not include treasury common stock
held by the Company as allocated to the Company at the shareholders allocation
date. |
| (10) Reasons for cancellation and conditions for cancellation
of the Stock Acquisition Rights |
|
Reasons for cancellation have not been stipulated. |
| (11) Starting date of computation regarding dividend on
stock delivered upon exercise |
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Cash dividends or distribution of money stipulated in Article 293-5
of the Commercial Code of Japan (interim dividends) on the Companyfs common
stock delivered upon request for exercise will be paid by assuming that
the Companyfs common stock has been delivered on April 1 when the request
for exercise was made during the period from April1 to September 30, and
that the Companyfs common stock has been delivered on October 1 when the
request for exercise was made during the period from October 1 to March
31. |
| (12) Receiving agent of request for exercise |
|
(Transfer agent) Stock Transfer Agency Division, The Bank of Tokyo-Mitsubishi
UFJ, Ltd. |
| (13) Matters concerning substitute payment |
|
In accordance with Article 341-3, Paragraph 1, Items 7 and 8 of the
Commercial Code of Japan, when a person exercises the Stock Acquisition
Rights, such person shall be deemed to have requested that the total amount
to be paid upon exercise of such Stock Acquisition Right has been paid
in lieu of the full redemption of the Bonds, and it shall also be deemed
that the payment on such request has been made. |
|
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7. Particulars of Bonds
(1) Total amount of the Bonds |
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\3,000 million |
| (2) Face value of each Bond certificate |
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\75 million |
| (3) Interest rate on the Bonds |
|
The Bonds shall bear no interest. |
| (4) Period of redemption |
|
January 30, 2008 |
| (5) Redemption price |
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\100 per \100 in face value
However, in the event of early redemption, the prices shown in (6)(ii)
through (iv) of this Section shall apply. |
| (6) Method of and period of redemption |
|
| (i) |
The aggregate amount of the Bonds shall be redeemed on
January 30, 2008. |
| (ii) |
When the Company resolves to become a wholly
owned subsidiary of another company by stock exchange or stock transfer
at its general meeting of shareholders, the Company shall redeem the entirety
of the remaining Bonds at the amounts shown below per \100 in face value,
by giving to each bondholder of the Bonds with Stock Acquisition Rights
a prior notice of not less than 30 days and not more than 60 days of the
redemption date. Partial early redemption shall not be allowed in this
case.
From January 31, 2006 to January 30, 2007 \101
From January 31, 2007 to January 30, 2008 \100 |
| (iii) |
(a) |
The Company may redeem before maturity the entirety of the remaining
Bonds at \100 per \100 in face value (partial redemption is not permitted). |
|
(b) |
If the early redemption described in (iii) (a) of this Section is to
be implemented, the Company will submit written notification to this effect
to the bondholders of the Bonds with Stock Acquisition Rights at least
30 days (If the day on which redemption is scheduled to be made falls on
a bank holiday, the redemption date shall be brought forward to the preceding
bank business day) in advance of the scheduled redemption date and also
give prior notice of the items specified in the bond guidelines of the
Bonds with Stock Acquisition Rights. |
| (iv) |
(a) |
The bondholders of the Bonds with Stock Acquisition Rights have the
right to, request the Company to redeem the entirety or a part of the Bonds
held by it at \100 per \100 in face value at any time. |
|
(b) |
If a bondholder of Bonds with Stock Acquisition Rights intends to request
the Company to redeem before maturity as stipulated in (iv) (a) of this
Section, the holder must submit prior notification in writing in the form
designated by the Company to the Place of Payment of Redemption Money at
least three weeks before the scheduled redemption date (If the day on which
redemption is scheduled to be made falls on a bank holiday, the redemption
date shall be brought forward to the preceding bank business day), identifying
the Bonds requested to be redeemed before maturity, after entering the
date of request and affixing the bondholderfs name and seal impression
on it and attaching the bond certificates of the Bonds with Stock Acquisition
Rights. |
|
(c) |
The request for early redemption of the Bonds becomes effective when
documentation required for requesting early redemption reaches the Place
of Payment of Redemption Money. Bondholders who have submitted documentation
required for requesting early redemption may not cancel such requests after
submission. |
| (v) |
If the day on which redemption is scheduled to be made
falls on a bank holiday, the redemption date shall be brought forward to
the preceding bank business day. |
| (vi) |
The Company may purchase and cancel the Bonds at any time
after the payment day of the same; provided, however, that it is not possible
to cancel the Stock Acquisition Rights only. In the event that the Company
cancels the Bonds by purchase, it shall waive any and all rights to the
Stock Acquisition Rights so obtained. |
|
| (7) Form of bond certificate |
|
Bearer form
In accordance with Article 341-2, Paragraph 4 of the Commercial Code
of Japan, the transfer of either of the Bonds or the Stock Acquisition
Rights of the Bonds with Stock Acquisition Rights is not permitted. |
| (8) Collateral and guarantees |
|
There exists no collateral or guarantees on the Bonds with Stock Acquisition
Rights, and no asset is reserved particularly for the Bonds with Stock
Acquisition Rights. |
| (9) Financial covenants |
|
As long as any outstanding balance of the Bonds exists, if the Company
intends to establish a mortgage on other convertible bonds issued in Japan
by the Company or other convertible bond-type bonds with stock acquisition
rights to be issued in future in Japan by the Company after issuance of
the Bonds with Stock Acquisition Rights, such mortgage shall be pari passu
with that on the Bonds in accordance with the Secured Bonds Trust Law,
for the benefit of the Bonds with Stock Acquisition Rights. The convertible
bonds with stock acquisition rights means the bonds with stock acquisition
rights stipulated in Article 341-2 of the Commercial Code of Japan as to
which it has been resolved by the Board of Directors that when a holder
of the bonds with stock acquisition rights exercises the stock acquisition
rights, such holder shall be deemed to have requested that the total amount
to be paid upon exercise of such stock acquisition right has been paid
in lieu of the redemption of the total amount of the bonds and it shall
also be assumed that the payment on such request has been made in accordance
with Article 341-3, Paragraph 1, Items 7 and 8 of the Commercial Code of
Japan. |
| (10) Rating acquired |
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Not applicable. |
| (11) Recording agency of the bond |
|
The Bonds with Stock Acquisition Rights meet the requirements of the
provision of Article 297 of the Commercial Code of Japan, and therefore
the Company has not established a recording agency of the bond. |
| (12) Paying agent (place of payment of redemption money) |
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The Bank of Tokyo-Mitsubishi UFJ, Ltd. Main Branch |
| (13) Registrar |
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None |
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| 8. Application for listing |
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None |
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| 9. The above items are subject to the submissions made
under the Securities and Exchange Law becoming effective. |
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| 1. Use of funds raised |
| (1) Use of funds raised in current financing: |
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Estimated net proceeds of 2,980 million yen will be applied in full to
working capital and repayment of borrowings. |
| (2) Impact on Company earnings outlook: |
|
We are not changing our earnings forecasts for the fiscal year ending
March 31, 2006. |
|
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2. Distribution of profits to shareholders
(1) Basic profit distribution policy: |
|
Our basic management policy is to focus our efforts on reinforcement
of management structure by improving revenues, continuing stable dividend
payment to shareholders, and raising dividend ratio on the long-term basis. |
| (2) Approach to setting dividends: |
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Our basic dividend policy is to continue stable payment to shareholders,
taking into consideration the performance of the Company, and the appropriate
balance between dividend and retained earnings. |
| (3)Use of retained earnings |
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We will use retained earnings for preparation for both future financing
needs and reinforcement of management structure by reducing liabilities. |
| (4) Dividend information concerning the last three fiscal
years |
|
 |
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Notes:
1. Return on shareholderfs equity represents net income
of the relevant fiscal term divided by shareholdersf equity of the same
term (average of the amount of the shareholdersf equity at the beginning
of the term and the end of the term).
2. Dividend rate for shareholdersf equity represents aggregate
annual dividend divided by shareholdersf equity of the same term (average
of the amount of the shareholdersf equity at the beginning of the term
and the end of the term). |
|
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3. Other
(1) Equity financing conducted over the past three years |
|
None |
| (2) Information on the dilutive effect of latent shares |
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This round of financing is expected to result in latent shares of 14.13%
compared with the total number of shares outstanding as of January 13,
2006.
Note:
The percentage of latent shares is calculated assuming that the Stock
Subscription Rights on the Unsecured Convertible Bonds with Stock Acquisition
Rights mentioned above are all exercised at the initial Conversion Price
and that the number of shares issued is deducted from the most recent.The
ratio of residual shares will be 9.13% in the case of exercise of all the
Stock Acquisition Rights at Upper Limit Conversion Price, and 24.14% in the
case of exercise of all the Stock Acquisition Rights at Lower Limit Conversion
Price. |
| (3) Share price trends over the past three fiscal years |
|
 |
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Notes:
1. Figures for the fiscal year ending March 31, 2006 are as of January 13,
2006.
2. Price Earning Ratio (PER) represents fiscal year-end stock price
(closing price) divided by net income per share at the end of the same
fiscal year. With respect to the fiscal years ended March 31, 2004 and
2005, PER is not shown due to net loss per share. |
|
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4. Party to whom Bonds with Stock Acquisition Rights
will be allocated
(1) Party to whom Bonds with Stock Acquisition Rights will be allocated |
|
 |
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Note:
Information regarding gamount of capital,h gmajor shareholders,h
and ginvestment relationshiph is as of September 30, 2005. |
| (2) Others |
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Restriction of transfer of the Bonds with Stock Acquisition Rights
will be agreed upon between Shinko Securities Co., Ltd. (gShinko Securitiesh),
to whom allocation is scheduled, and the Company. In addition, Shinko Securities
agrees not to borrow stocks of the Company for a purpose other than short
selling in connection with the purchase of Bonds with Stock Acquisition
Rights within a volume of stocks resulting from exercise of the Stock Acquisition
Rights. |