TOKYO (April 24, 2003) – Kobe Steel, Ltd. announces that it plans to increase its equity share in the listed consolidated subsidiary Shinko Engineering Co., Ltd. (stock exchange no. 6020) through a tender offer of its outstanding shares. This decision was reached at the Board of Directors meeting held today.
The machinery segment of the Kobe Steel Group offers industrial plants, environmental equipment, industrial machinery, internal combustion engines, and heavy electrical equipment. Due to the long slump in public works and private-sector capital investment, profit levels have been low, and the Kobe Steel Group has been striving to increase its profitability through structural reforms. A group company of Kobe Steel is Shinko Engineering whose main products consist of internal combustion engines, speed changers, testing equipment, and construction equipment. Several products complement those of Kobe Steel and its other group companies. Especially in cogeneration systems and continuous power generation equipment, which are the main products of the internal combustion engine business, lower electricity rates leading to low demand for power generation equipment and intensified competition have crimped profitability. In response, Shinko Engineering has begun to reduce the number of its employees and is implementing measures to improve operational efficiency and reduce costs. The Kobe Steel Group recognizes the need to combine the strengths of its companies, increase the synergies in the Group, and operate as one unified enterprise. In order to strengthen the management base of Shinko Engineering on a consolidated basis, Kobe Steel has decided that increasing its equity share in Shinko Engineering will enable Kobe Steel to integrate and more flexibly manage Shinko Engineering. After the tender offer, Kobe Steel plans private placements that would increase the paid-in capital of Shinko Engineering by approximately 600 million yen.
(1) Profile of Target Company
Major stockholders & their equity shares (as of September 30, 2002):
Recent financial highlights Consolidated figures for fiscal years ending in March (in millions of yen)
Non-consolidated figures for fiscal years ending in March (in millions of yen)
Relationship with Shinko Engineering
(2) Type of shares to be offered: Common stock
(5) Basis for calculating offer price:
(7) Change in number of shares
(8) Date of public notice on start of offer period: May 28, 2003
(10) Funding for the offer: 365 million yen
Following the closing of the tender offer, Kobe Steel intends to conduct private placements. Depending on the results, this could lead to a delisting of Shinko Engineering. Notification will be given on the private placements when details have been finalized. |