Tokuyama : Notice concerning Third-Party Allotment of the New Shares and Transfer of the Shares of Consolidated Subsidiary(917KB)

(Note) This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

September 28, 2016 Company name: Tokuyama Corporation Representative: Hiroshi Yokota, President and Representative Director (Code No. 4043, First Section TSE)

Contact: Taro Kobayashi, General Manager Corporate Communications & Investor Relations Dept.

TEL: +81-3-5207-2552

With a resolution at a meeting of Board of Directors held today, Tokuyama Corporation (hereinafter referred to as the "Company," "Tokuyama" or "we") hereby announces that the Company's consolidated subsidiary in Malaysia, Tokuyama Malaysia Sdn. Bhd. (hereinafter referred to as "Tokuyama Malaysia") will issue new shares to OCI Company Ltd. in Korea (hereinafter referred to as "OCI") as a third-party allotment and the Company will transfer all shares of Tokuyama Malaysia to OCI.

As a consequence of the above-mentioned transactions, Tokuyama Malaysia will be excluded from the consolidation of the Company.

1. Reason for the Third-Party Allotment of New Shares and Transfer of Shares

   Tokuyama Malaysia was established in August 2009 to expand the semiconductor-grade and solar-grade polycrystalline silicon business. Due to the technological issues of manufacturing facilities and deteriorating market condition of solar-grade polycrystalline silicon, two huge impairment losses in connection with plants were posted. To continue Tokuyama Malaysia's business, the efforts to improve the manufacturing facilities and the productivity were taken, and certain level of productivity has been achieved. In addition, to further strengthen Tokuyama Malaysia's business structure, the Company has been evaluating every option including Tokuyama Malaysia's alliance with other company.

   As a result, the Company has reached to the conclusion that transferring the business of Tokuyama Malaysia to OCI, a global player of solar power business including the production of polycrystalline silicon, will be the best choice for parties, and finally the Company reached an agreement with OCI about the third-party allotment of new share and transfer of shares of Tokuyama Malaysia to OCI.

2. Outline of the consolidated subsidiary whose shares are to be transferred

   (1)	Name	Tokuyama Malaysia Sdn. Bhd.
   (2)	Location	Samalaju Industrial Park, Sarawak, Malaysia
   (3)	Name and Title of Representative	Hiroshi Nomura (President and Representative Director)
   (4)	Business	Production and sale of polycrystalline silicon
   (5)	Capital	6,567 million yen
   (6)	Date of Establishment	August 18, 2009
   (7)	Major Shareholder and Ratio of Shareholding	Tokuyama Corporation 100%
   (8)	Relationships between the Parties	Capital Relationship	Relevant company is Tokuyama's consolidated subsidiary and Tokuyama's ratio of shareholding is 100%.
   Personnel Relationship	One executive officer and four employees of Tokuyama serve five board members of the relevant company concurrently. No related parties or affiliates of Tokuyama have any significant personnel relationship with the relevant company.
   Transaction Relationship	Tokuyama is lending the fund to the relevant company.
   (9)	Results of Operations and Financial Conditions for Previous Three Fiscal Years (Expressed in millions of Japanese Yen unless otherwise specified)
   Fiscal Year Ended		March 2014		March 2015	March 2016
   Net Assets		126,355		32,582	(101,551)
   Total Assets		208,965		148,936	22,298
   Sales		-		4,387	8,849
   Operating Loss		(952)		(4,344)	(10,298)
   Ordinary Loss		(2,099)		(6,987)	(11,449)
   Net Loss		(2,099)		(93,772)	(135,475)

3. Outline of the other party of the third-party allotment and the share transfer

   (1)	Name	OCI Company Ltd.
   (2)	Location	94, Sogong-ro, Jung-gu, Seoul, Korea
   (3)	Name and Title of Representative	Lee Woo Hyun (President and Representative Director)
   (4)	Business	Production and sales of inorganic chemicals, petro and coal chemicals, fine chemicals, and raw materials for solar panels
   (5)	Capital	127,247 million Korean Won
   (6)	Date of Establishment	August 5, 1959

   (7)	Net Assets	3,242,206 million Korean Won
   (8)	Total Assets	7,298,775 million Korean Won
   (9)	Major Shareholders and Ratios of Shareholdings	Lee Soo-Young 10.92 %, National Pension Service 10.33 %, Samsung Asset Management Company, Ltd. 6.44%, Lee Hwa-Young 5.43%, Lee Bok-Young 5.40%
   (10)	Relationships between the Parties	Capital Relationship	Tokuyama and the relevant company have no significant capital relationship.
   Personnel Relationship	Tokuyama and the relevant company have no significant personnel relationship.
   Transaction Relationship	Tokuyama and the relevant company have no significant transaction relationship.
   Status as a Related Party	The relevant company does not belong to Tokuyama's related parties.

4. The outline of third-party allotment

   (1)	Number of shares to be issued	First allotment 50,000,000 shares (Tokuyama's shareholding after the first allotment: 83%) Second allotment 210,000,000 shares (Tokuyama's shareholding after the second allotment: 49%)
   (2)	Amounts of procurement funds	USD 24 million (first allotment) USD 78 million (second allotment)
   (3)	Allottee	OCI Company Ltd.
   (4)	Payment date	First allotment October 7, 2016 (planned) Second allotment March 31, 2017 (planned)

   * The third-party allotment and share transfer to OCI will be subject to the acquisition of permission of notification or the like regarding business combination from competition authorities of the relevant countries.

5. The number of shares to be transferred and the status of the shares before and after the transfer

   (1)	Number of shares before the transfer	252,356,839 shares (Tokuyama's shareholding: 49%)
   (2)	Number of shares to be transferred	252,356,839 shares
   (3)	Transfer price	USD 98 million
   (4)	Number of shares after the transfer	0 shares (Tokuyama's shareholding: 0%)

6. Timetable

   (1)	Resolution of the Company's Board of Directors relating to the transfer of shares	September 28, 2016
   (2)	Conclusion of share transfer agreement	September 29, 2016 (planned)
   (3)	OCI's payment for third-party allotment (First allotment)	October 7, 2016 (planned)

   (4)	OCI's payment for third-party allotment (Second allotment)	March 31, 2017 (planned)
   (5)	Share transfer	March 31, 2017 (planned)

7. Extraordinary Loss and Future Prospect

As a consequence of the above-mentioned transactions, Tokuyama Malaysia will be excluded from the consolidation of Tokuyama. With the transfer of Tokuyama Malaysia to OCI, it is expected that around 8 billion yen of loss on business transfer will be recorded as the extraordinary loss during the fourth quarter of the fiscal year ending March 31, 2017, however, the total amount of loss would be changed due to the performance of Tokuyama Malaysia until the exclusion from the consolidation or other factor. The tax expense for the fiscal year ending March 31, 2017 is expected to be reduced by around 8 billion yen as a result of above transactions.

Any impact of the share transfer on Tokuyama's consolidated financial results for the fiscal year ending March 31, 2017, is currently being assessed. If and when a material impact is expected, Tokuyama will make a timely announcement as the impact is fixed.