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| May 12, 2004 |
| To Whom It May Concern, |
Company Name:
Stock Code:
Representative:
Inquiries:
Telephone:
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BB Net corp.
2318
Eiji Tanaka, President & CEO
Yasuhisa Okubata, Director
General Manager
Corporate Planning Office
+81-(0) 6-4797-1102
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| BB Net corp. (the “Company”) today announced its Board of Directors’ decision to issue unsecured yen-denominated convertible bonds with stock acquisition rights due 2007. A summary of the Convertible Bonds is presented below. |
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| 1. Name of the Bonds |
BB Net corp. unsecured yen-denominated convertible bonds with stock acquisition rights due 2007 (the “Convertible Bonds ”)
The Convertible Bonds are made up of a bond portion (the “Bonds”) and a stock acquisition rights portion (the “Rights”). |
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2. Aggregate issue amount: |
| ¥1,900,000,000 |
3.Bond issue price: |
| 100% of face value (face value of the Bonds is ¥10,000,000 each) |
4. Interest rate: |
| The Bonds will bear no interest. |
5. Payment date: |
| May 31, 2004 (London time). |
6. Maturity date: |
| May 31, 2007 (London time) |
7. Collateral or guarantee: |
| None |
8. Information regarding the Rights |
| (1) |
Number and type of shares for the Rights
The Rights shall be exercised to purchase shares of common stock of the Company in the following manner. Upon exercise of the Rights, the Company will issue new shares of common stock or, otherwise, transfer shares of common stock held by the Company (hereafter called the “Delivery of Shares” for both cases). The number of shares to be delivered will be the total issue price of bonds associated with the exercise of the Rights divided by the conversion price as described in item (4) below. However, any fraction of less than one one-hundredth of a share resulting from the exercise of these rights will neither be issued and nor adjusted through a cash payment. In the event that the exercise of the Rights results in the issuance of shares that are less than one share, the Company will make an adjustment through a cash payment to the extent allowed by all applicable laws. |
| (2) |
Number of the Rights: 190 |
| (3) |
Issue price of the Rights: Gratis |
| (4) |
Payment upon exercise of the Rights
| a. |
The amount to be paid upon exercise of the Rights is the same as the issue price of the bond associated the exercise to which the right is attached. |
| b. |
The amount to be paid per share upon exercise of the Rights (the “Conversion Price”) is originally fixed ¥318,000. |
| c. |
In the event that, the average closing share price of the Company’s common stock, with all fractions of one yen rounded up, on the Osaka Securities Exchange for ten consecutive trading days up to and including May 31, 2005 (Japan time, hereafter the “Determination Date”), excluding trading days when no closing share price for the Company’s stock was announced, (hereafter the “Determination Date Price”) is at least one yen below the Conversion Price on the Determination Date, Conversion Price shall be revised downward to the applicable Determination Date Price from June 10, 2005 (Japan time, the “Date of Effectiveness”) onward (however, from the day following the Determination Date until and including the Date of Effectiveness, subject to the adjustment in (d)).
Nonetheless, the adjusted Conversion Price shall not be less than an amount equivalent to 80% of the Conversion Price (the “Minimum Conversion Price), with all fractions of one yen rounded up, that was valid on the Determination Date. In the event that the result of the adjustment calculation is an amount below this minimum, the Minimum Conversion Price shall become the adjusted Conversion Price. However, it is subject to the adjustment in (d) below between the day following the Determination Date up to and including the Date of Effectiveness. Furthermore, the Conversion Price may not be adjusted downward to a level that is not permitted by law. |
| d. |
The Conversion Price shall, after the issue of these Convertible Bonds, be adjusted as follows in the event that the Company issues new shares or sells shares at a price below the market price. In the following formula, the current number of shares issued is the total number of shares issued net of those held in treasury stock. |
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Adjusted
Conversion
Price |
= |
Current
Conversion
Price |
x |
Current
number of
shares
issued |
+ |
Number of shares to
be issued or sold |
x |
Issue or sales
price per
share |
 |
| Market price |
|
Current number of
shares issued |
+ |
Number of shares to be
issued or sold |
|
| |
The Conversion Price shall be adjusted as appropriate in the event that the Company’s shares are split or consolidated, or that stock acquisition rights (including bonds with stock acquisition rights) to purchase the Company’s stock are issued at a price below market price, or when similar events take place that require the Conversion Price adjustment. |
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| (5) |
Basis for calculation of issue price of the Rights and amount to be paid upon exercise
The Rights are attached to the Convertible Bonds and cannot be sold separately from the Bonds and the Bonds are considered redeemed upon the exercise of the Rights. In consideration of the mutually close relationship between the Bonds and the Rights as shown above, and in consideration of the theoretical intrinsic value of the stock acquisition rights and the economic value received by the Company from the Bonds under the issue price of the Bonds, the issue price of the Rights is fixed gratis.
The amount to be paid upon the exercise of one Right is the issue price of the Bonds, and the initial Conversion Price shall be 106.71% of the closing share price of the Company’s stock on the Osaka Securities Exchange on May 12, 2004. |
| (6) |
Exercise period of the Rights
On and from July 1, 2004 until the close of business on May 28, 2007 at the location accepting requests for the exercise of the Rights. However, (i) in the event of an early redemption as described in 10. (b) and (c) below, , the exercise period shall end at the close of business on the third business day prior to the early redemption date at the location accepting requests in Tokyo; (ii) in the event that the Company repurchases to cancel the Convertible Bonds, the exercise period shall end when the bond is cancelled; (iii) in the event that the Company can no longer meet its financial obligations regarding the bonds and falls into event of defaults, the exercise period shall end at that time. |
| (7) |
Further Conditions for the exercise of the Rights
In the event that the Company can no longer fulfill its financial obligations regarding the Bonds, the Rights may no longer be exercised. |
| (8) |
Conditions and circumstances for cancellation of the Rights
The stock subscription will not be cancelled under any circumstances. |
| (9) |
Amount of issue price not booked as paid-in capital
The issue price less the amount to be booked as paid-in capital. The amount to be booked as paid-in capital is equal to the Conversion Price multiplied by 0.5, with the result rounded up to the nearest whole yen. |
| (10) |
Payment at exercise
As stipulated in Article 341-3 Paragraph 1-7 and 1-8 of the Japanese Commercial Code, redemption of the Bonds upon the exercise of the Rights is regarded as the full payment for the acquisition of the shares. |
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9. Subscription method |
| All bonds will be underwritten and privately placed by Mizuho International plc in markets outside Japan (excluding the United States), primarily Europe. |
10. Redemption of the Convertible Bonds |
| (1) |
Maturity
The Company will pay 100% of face value upon maturity on May 31, 2007. |
| (2) |
Early redemption upon exercise of 130% call option
From May 31, 2005 onward, in the event that the closing share price of the Company’s stock on the Osaka Securities Exchange is 130% or more of the current Conversion Price for 30 consecutive days (excluding days when there is no closing share price), the Company may, after providing bond holders prior notice of at least 30 days and not more than 60 days, redeem all Bonds (but not partially) at 100% of face value. |
| (3) |
Early redemption due to changes in taxation
In the event that, from May 12, 2004 onward, a change in Japan’s tax laws or other applicable change causes the Company to be obligated to make additional payments, and also that the Company is unable to avoid this obligation despite taking reasonable actions, the Company may, prior to 90 days before the earliest date upon which the obligation for additional payments occurs, and after providing bond holders prior notice of at least 30 days and not more than 60 days, redeem all Bonds (but not partially) at 100% of face value. |
| (4) |
Repurchase for cancellation
The Company and its subsidiaries may at any time purchase the Convertible Bonds on the open market or through other means. The Company and its subsidiaries may then, at their discretion, hold, sell or cancel the Convertible Bonds. |
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(Reference) |
1. Use of proceeds |
| (1) |
Approximate net proceeds of ¥1.9 billion will be used for new businesses and improvement of financial conditions that will further strengthen the Company’s base of operations. |
| (2) |
Change in use of proceeds from previous fund procurement
Not applicable |
| (3) |
Effect on Company earnings
The effect on earnings will be announced as required. |
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2. Distribution of earnings to shareholders |
| (1) |
Fundamental policy regarding distribution of earnings
The Company regards the return of earnings to shareholders as one of its most important management issues. The fundamental policy is to make dividend payments, conduct stock splits and take other actions to return earnings while taking into consideration of the status of business activities and operating results in each fiscal year. |
| (2) |
Approach to setting the dividend
As the BB Net Group has been operating for only a short time since its establishment, the Company has not yet been able to accumulate an adequate level of retained earnings. Retained earnings are, while used for achieving a stronger financial position, allocated in a balanced manner between reinvestments in the group’s businesses and the direct return to shareholders in the form of dividends. Along with stock splits and other actions, the Company is committed taking actions that will both return earnings to shareholders and raise its value. |
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