Mitsubishi Rayon Co., Ltd.
Daicel Corporation

　Mitsubishi Rayon Co., Ltd. (Head office: Chiyoda-ku, Tokyo; President: Hitoshi Ochi, hereinafter “MRC”) and Daicel Corporation (Head office: Kita-ku, Osaka; President: Misao Fudaba, hereinafter “Daicel”) have held discussions regarding the establishment of a joint venture for the production of acetate tow for cigarette filters, and these discussions led to the recent signing of a contract between the two companies.
  In preparation for the establishment of the joint venture company, MRC will spin off its acetate tow production business on October 1 2012, located within its Toyama Production Center (Toyama City, Toyama Prefecture), as a wholly owned subsidiary.
 
1.Background to the establishment of joint venture company
　Cigarette demand is growing globally, particularly in emerging nations in Asia, Africa and Eastern Europe.  To serve this expanding market, MRC and Daicel aim to set up an internationally competitive production system, through the joint venture company to be established for the manufacture of acetate tow for cigarette filters.
 
　MRC aims, through its stronger co-operative relationship with Daicel in the manufacture of acetate tow, to develop solid base for its business portfolio and also enhance its acetate filament business by boosting earnings through expansion of the market for acetate textile, an environment-friendly textile ideal for fashionable apparel items.
 
　For Daicel, acetate tow for cigarette filters is one of its core businesses. Given the growing demand, Daicel has promoted its acetate tow business in accordance with its “3D-I” medium-term plan.  Establishment of this joint venture is a part of that initiative.
　Daicel undertakes to upgrade and expand the acetate tow production facilities at the current business site in preparation for the commencement of commercial operations in July 2013, and in addition, to increase production of acetate tow at its joint venture company in China.
 
2. Outline of the Joint Venture
(1) The joint venture in question shall be formed through the spinoff by MRC of its acetate tow production operations as a subsidiary and the subsequent transfer to Daicel of a portion of the shares of the newly established company (hereinafter “Newco”).
(2) MRC will hold a 65% interest in Newco and Daicel will hold the remaining 35%.
(3) Newco will supply its output to both MRC and Daicel and both companies will continue their independent sales activities respectively.
(4) Daicel will supply raw material (cellulose acetate flakes) for the operation of Newco.
(5) Schedule for formation of the joint venture; promptly after obtaining regulatory clearance from the antitrust authorities of all countries concerned, as detailed in the section 4.
 
3. Outline of the new company to be established through the spin-off
(1) Corporate name: Toyama Filter Tow Co., Ltd.
(2) Head office & production plant: Toyama City, Toyama Prefecture, Japan
(3) Paid-in capital: 50 million Yen  (wholly owned by MRC)
(4) Employees: approximately 100
(5) Line of business: production of acetate tow for use in cigarette filters
 
4. Schedule
　Promptly after obtaining the regulatory clearance from the Japan Fair Trade Commission and the antitrust authorities of all other countries concerned, MRC will transfer 35% of all issued shares in the newly established company to Daicel, thereby creating a joint venture company.