Oasis Response to Hokuetsu’s Announcement on Reducing Daio Paper Stake (Securities Code: 3865 JT)

www.HokuetsuCorpGov.com

HONG KONG–(BUSINESS WIRE)–Oasis Management Company Ltd. (“Oasis”) is the manager to funds that beneficially own approximately 18% of Japanese paper manufacturer Hokuetsu Corporation (3865 JT) (“Hokuetsu” or the “Company”). Oasis has adopted the Japan FSA’s “Principles of Responsible Institutional Investors” (a/k/a the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies.

Oasis has been engaging with Hokuetsu since 2019 in efforts to help improve the Company’s corporate governance and corporate value. Unfortunately, Hokuetsu’s CEO has been the barrier to a productive engagement. Accordingly, Oasis has submitted a shareholder proposal to dismiss Mr. Kishimoto and the four incumbent “independent” directors and nominating five new truly independent directors. We firmly believe that our proposals for change at the Board level will lay a crucial foundation for Hokuetsu on which it can enhance its corporate governance and embark on a trajectory of improving corporate value for the benefit of all stakeholders.

Hokuetsu’s recent May 15 announcement is a transparent attempt by President Kishimoto to yet again overpromise and underdeliver. Hokuetsu claims it will achieve JPY 3 billion in synergies in FY27/3 with Daio Paper, while simultaneously reducing its Daio Paper stake. We have never seen a case where a company announces a strategic alliance while simultaneously divesting its cross-shareholdings of that strategic partner. Moreover, there were no numerical details provided on where the synergies are to be gained from or by when, nor did they disclose to whom and at what price they plan to sell their Daio shares.

Back in 2012, when Hokuetsu originally bought the Daio stake under Mr. Kishimoto’s leadership, the Company made similar promises. It has now been over 12 years and we have not seen any progress on synergies or partnership, including the failed alliance with Daio Paper that abruptly ended in April 2017. Hokuetsu’s stock price is down -8.4% since Hokuetsu’s May 15 announcement, which we believe demonstrates Mr. Kishimoto’s poor management, and that shareholders will not be fooled again.

We seek progress for all Hokuetsu stakeholders, and aim to achieve real synergies, real accountability, and improved governance at Hokuetsu. To achieve this, we urge shareholders to vote FOR Oasis’s proposals to dismiss Mr. Kishimoto and the four incumbent “independent” directors and approve the slate Oasis has proposed of five truly independent, skilled, and diverse new directors. Daio Paper’s stock price is now down over -50% from when we first approached Hokuetsu to sell its Daio Paper shares, and we believe now may not be the right time to sell. The new management team including the five new independent directors we hope will be elected can decide on the appropriate timing and price to sell Hokuetsu’s shares of Daio Paper, or to proceed with a potential merger.

To learn more about Oasis’s proposals, please visit www.hokuetsucorpgov.com. We welcome all stakeholders to contact Oasis at info@hokuetsucorpgov.com to help improve Hokuetsu’s Corp Gov through accountability now.

Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at https://oasiscm.com. Oasis has adopted the Japan FSA’s “Principles of Responsible Institutional Investors” (a/k/a Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with our investee companies.

The information contained in this press release (referred to as the “Document”) is an information resource for shareholders in Hokuetsu offered by Oasis, the investment manager to funds that are shareholders of Hokuetsu (the “Oasis Funds”). The Document is not intended to solicit or seek shareholders’ agreements to jointly exercise any voting rights with Oasis. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate share ownership with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Oasis does not intend to be subjected to such notification requirement.

Contacts

For all inquiries, please contact:

Taylor Hall

media@oasiscm.com