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| August 22, 2005 |
| Mitsubishi Rayon Co., Ltd. |
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Polypropylene Fiber Operations to be Spun Off
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| At a meeting of the Board of Directors of Mitsubishi Rayon Co., Ltd. (MRC) on August 22 the decision was reached to spin off the Company’s polypropylene fiber operations as a wholly-owned subsidiary. |
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Objectives of Spin-Off
Of the various synthetic fibers, polypropylene fibers are the lightest, show the strongest resistance to degradation by the action of chemical solvents, bases and acids, as well as the greatest durability, and are also easy to recycle. Polypropylene fibers are coming increasingly under the spotlight as a means of helping retard the global warming process, as they can be produced using waste residue from oil refineries, which would otherwise be burned, giving off carbon dioxide. Moreover, the fact that these fibers are easily recyclable also indirectly contributes to the fight against global warming.
Mitsubishi Rayon began producing polypropylene fibers in 1962, and they have been applied principally in the fields of carpets and basic industrial materials. Recently, however, market needs for polypropylene fibers have become increasingly sophisticated and diverse, in addition to which the business environment has rapidly become very difficult owing to rises in the price of the raw materials (petroleum) and competition with other materials. In view of these factors, the management of MRC has decided that the most efficient and flexible way of operating the business is to spin it off as an independent company fully specializing in polypropylene fibers as a product with unique properties.
The management of the newly established company will focus their energies on marketing efforts tailored to the precise requirements of each customer, on developing new products with high value-added and good market potential, and on improving the operation’s cost-competitiveness. If the new company can succeed in these respects, it has every chance of expanding its business scale.
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Schedule and details of procedure
The new company, to be named MRC Pylen Co., Ltd. is scheduled to be established on October 3, 2005. In accordance with the provisions of Article 374-6-1 of the Commercial Code, the Company is allowed to spin off a portion of its business operations as an independent company in this way without seeking the prior approval of its shareholders. All 6,000 shares to be issued by MRC Pylen Co., Ltd. will be owned by the parent company, Mitsubishi Rayon Co., Ltd.
All assets and liabilities held or owed by the polypropylene fiber operating division of MRC, as well as all claims and obligations relating to contracts concluded for the purpose of doing business, will be inherited by MRC Pylen Co., Ltd.
The management of MRC has judged that all liabilities of MRC itself or of MRC Pylen whose date of repayment will arrive following the establishment of MRC Pylen will be repaid in full. |
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| President: |
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Yoichi Iwasaki |
| Directors: |
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Takao Miyamori
Yoshinori Matsumoto
Shinpei Haratake (non-standing)
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| Corporate Auditor: |
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Takeo Tanaka (non-standing) |
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| Corporate Profile of Grafil Inc. |
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| Name |
MRC Pylen Co., Ltd. |
| Lines of business |
Production and sale of polypropylene fibers |
| Open for business |
October 3, 2005 |
| Location |
7-10 Hikocho 2-chome, Izumi, Osaka |
| President |
Yoichi Iwasaki |
| Paid-in capital |
¥300 million |
Shares issued and
outstanding |
6,000 shares |
Shareholders’
equity |
¥300 million |
| Total assets |
¥1,426 million |
| Term end |
March 31 |
| Employees |
19 |
Major business
partners |
Toli, Co., Ltd.
Yamamoto Agricultural Co., Ltd. |
| Sole shareholder |
Mitsubishi Rayon Co., Ltd. (100%) |
| Main bank |
The Bank of Tokyo-Mitsubishi, Ltd. |
Relationship with
Mitsubishi Rayon
Co., Ltd. (MRC),
the parent
company |
Capital |
Wholly-owned subsidiary |
| Personnel |
MRC will assign directors to MRC Pylen; the independent subsidiary will retain essentially the same staff (seconded by the parent company) as the current division |
Business
relationships |
The parent company will supply the subsidiary with electric power and steam heating; will lease office space to it; and will perform administrative work on an outsourced contract basis. |
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Business performance of MRC’s polypropylene fiber business
for the latest term, ended March 2005 |
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Polypropylene fibers
(a) |
MRC as a whole (b) |
Ratio a/b |
| Sales |
¥3,011 million |
¥212,905 million |
1.4% |
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| Note: As it is difficult to separate expenses for the polypropylene fiber business from those common to other divisions of MRC, a calculation of profit/loss for the business has not been attempted. |
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| (Company’s estimates of values on October 3, 2005) |
| Assets |
Liabilities |
| Item |
Book value |
Item |
Book Value |
| Trade receivables
Inventory assets
Other assets
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¥1.4 billion |
Borrowings
and other
liabilities |
¥1.1 billion |
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| Note: The total assets of Mitsubishi Rayon Co., Ltd. will decrease by ¥1,126 million as a result of the spin-off of its polypropylene fiber operations; the effects of the spin-off on the Company’s overall consolidated business performance will be minimal. |
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| For further inquiries, please contact: |
| Public and Investor Relations Office |
| e-mail:
koho@mrc.co.jp |
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