Rengo : Enters into Memorandum of Understanding Regarding Support for Taiko Paper Mfg., Ltd.

January 15, 2021

Rengo Enters into Memorandum of Understanding Regarding Support for Taiko Paper Mfg., Ltd.

Rengo Co., Ltd. announces that, on January 15, 2021, it was resolved by Rengo's Board of Directors to enter into a memorandum of understanding with Taiko Paper Mfg., Ltd. (TPM) to consider supporting the business reconstruction of TPM, and the memorandum of understanding has been executed. TPM filed an application to commence corporate reorganization proceedings in the Tokyo District Court on January 15, 2021.

1. Reasons for Entering into the Memorandum of Understanding

TPM is a paper manufacturing company in Fuji-shi, Shizuoka Prefecture that conducts the business of manufacturing and sales of kraft pulp, kraft paper and speciality paper (metals interleaving paper, paper towels, etc.) and recycling (the subject business).
The business performance of TPM has been stagnant due to factors such as the steep increase in prices of raw materials and intensified sales competition in recent years. As demand declined and financing tightened due to the spread of the COVID-19 pandemic at the start of last year, the company applied for commencement of corporate reorganization proceedings.
As well as seeking to improve the profitability of the subject business by the support of the Rengo Group for the business reconstruction of TPM, Rengo aims to add value to the Group's upstream supply chain by expanding into the manufacturing of kraft pulp and kraft paper, which are raw materials for the Rengo Group's paperboard and heavy duty packaging businesses. For these reasons, Rengo decided to enter into the memorandum of understanding and to proceed without delay to carry out consultations and examine implementation of the reconstruction support and the methods, etc. for doing so.

2. Main Content of Memorandum of Understanding

In association with the corporate reorganization proceedings of TPM, Rengo will examine supporting the reconstruction of the subject business with the aim of subsequently entering into a sponsor agreement providing for specific reconstruction support methods, etc., in consultation with TPM.

3. Overview of Taiko Paper Mfg., Ltd.

(1) Address	10 Kamiyokowari, Fuji-shi, Shizuoka Prefecture
(2) Representative	Kenji Hitoshi, Chairman & Representative Director Yoshihisa Shiokawa, President & Representative Director
(3) Capital	100 million yen
(4) Major shareholders	Idetoku Kensetsu Co., Ltd. (36.4%) SATO TEC. CORPORATION (30.6%)
(5) Main business	Manufacturing and sales of kraft pulp, kraft paper and specialty paper, and recycling
(6) Net sales	Approximately 12 billion yen (fiscal year ended March 31, 2020)
(7) Number of employees	210

4. Schedule

Meeting of the Board of Directors of Rengo (approval of entering into memorandum of understanding)	January 15, 2021
Date of execution of memorandum of understanding	January 15, 2021

5. Future Outlook

The agreement is a memorandum of understanding entered into for considering reconstruction support for the subject business conducted by TPM, and it has not been decided to provide such support.
Going forward, in the event that concrete implementation of support and the methods, etc. of providing it are determined, they will be announced without delay.