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Announcement
of extraordinary losses accompanying
the transfer of an overseas affiliate |
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Mitsubishi Rayon Co., Ltd. announces
that extraordinary losses will be posted
in the interim and full-term accounts settlements for the current fiscal
year, ending March 31, 2009. Details are as follows. |
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| 1. Cause of extraordinary losses |
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Mitsubishi Rayon has decided to sell its equity
stake in the spinning company P.T. Vonex Indonesia in a lump sum to
Indonesian entrepreneur Mr. Choi Wijaya, and thereby withdraw from
the spinning business in Indonesia. This decision was taken at the
meeting of the Board of Directors held on September 29, 2008. Accompanying
this move, the Company anticipates the posting of an extraordinary
loss of approximately ¥4.3 billion for the current term, ending
March 31, 2009. |
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| 2. Background to withdrawal
from the Indonesian spinning industry |
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Amid rising raw material costs for acrylic fiber
production and the consequent decline in global demand for the
product, the operating environment has deteriorated rapidly. Vonex
was established in 1974, and since the 1990s it has served as a
major production base for spinning yarn for the Japanese market.
Subsequently, however, the company’s earning performance
worsened as demand for yarn declined due to a decrease in textile
production in Japan.
Vonex reduced the scale of production twice, in 2003
and again in 2005.The company worked to reduce costs, targeted select
customers, and made extensive efforts to improve its earnings performance.
However, substantial price increases, centering on wages, electricity
charges and fuel costs, largely offset these cost savings. The management
of Mitsubishi Rayon has decided to divest its stake in Vonex, taking
into account the company’s limited prospects for regaining
profitability under the current management in the near future.
Mr. Choi Wijaya is a long-time customer of Vonex, and
MRC has been conducting negotiations with him regarding the current
transfer of shares since the end of 2007. At this time, we have
finally concluded an agreement formalizing the sale of MRC’s
shares in Vonex. |
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| 3. Schedule for Vonex |
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| (1) |
Transfer schedule
Transfer of management
authority: January 2009 (tentative)
Transfer of shares:
April 2009 (tentative) |
| (2) |
Operations to continue as usual
Operations at
Vonex will continue under the direction of the new shareholder.
To facilitate the stable operation of Vonex, Mitsubishi Rayon
will continue to provide cooperation to ensure a steady supply
of yarn to the company’s current customers. |
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| 4. Revised forecasts for the
term ending March 31, 2009 |
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Regarding the Company’s forecasts for the
first half of the current period and the full term, we are currently
assessing the probable impact of the withdrawal on the Company’s
income statement on a consolidated basis. We will announce our
revised forecasts as soon as possible.
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Reference:
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Overview of foreign subsidiary P.T. Vonex Indonesia
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| 1. |
Company name: P.T. Vonex Indonesia |
| 2. |
Location: Bandung, Indonesia |
| 3. |
Establishment: June 1996 |
| 4. |
Established: March 14,1974 |
| 5. |
Paid-in capital: US$43,660,000 |
| 6. |
Equity stakes: |
(Percentage of shares held) |
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| Mitsubishi Rayon Co., Ltd. |
97.3% |
| Mr. Choi Wijaya* |
2.7% |
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*Mr. Choi Wijaya acquired the Vonex shares from
Sojitz Corporation in March 2008. |
| 7. |
Number of employees: 758 (as of August 31, 2008) |
| 8. |
Annual sales: |
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2005 |
US$38.0 million |
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2006 |
US$27.0 million |
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2007 |
US$29.9 million |
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| For further inquiries, please contact: |
| Public and Investor Relations Office |
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