Accordia Golf : Notice Regarding Shareholders’ Request to Convene an Extraordinary Meeting of Shareholders

August 7, 2014
Press Release
Company Name: Accordia Golf Co., Ltd. Representative: President & CEO, Ryusuke Kamata (Securities Code: 2131, TSE 1st Section)
For inquiries, contact: Managing Executive Officer, Motoo Michida
TEL: [phone]

Notice Regarding Shareholders' Request to Convene an Extraordinary Meeting of

Shareholders

On August 6, 2014, Accordia Golf Co., Ltd. (hereinafter "Accordia" or the "Company") received a letter of request to convene an extraordinary meeting of shareholders (hereinafter the "Request") from our shareholders, Reno Co., Ltd., C&I Holdings Co., Ltd., Minami-Aoyama Fudosan LLC, and City Index Hospitality Co., Ltd. (collectively the "Shareholders"). Please note that this is a repeated request with additional requestors with the same content as to a letter of request to convene an extraordinary meeting of shareholders received from Reno Co., Ltd. on August 5, 2014 as announced in the press release dated August 6, 2014, entitled "Notice Regarding Shareholders' Request to Convene an Extraordinary Meeting of Shareholders."
1. Party who made the Request
Reno Co., Ltd. (Dai-2 Miyachu Building 8th Floor, 3-8-37 Minami-Aoyama, Minato-ku, Tokyo; Emi Miura, Representative Director)
C&I Holdings Co., Ltd. (3-8-37 Minami-Aoyama, Minato-ku, Tokyo; Tatsuya Ikeda, Representative
Director)
Minami-Aoyama Fudosan LLC (3-8-37 Minami-Aoyama, Minato-ku, Tokyo; Tatsuya Ikeda, Representative Director)
City Index Hospitality Co., Ltd. (3-8-37 Minami-Aoyama, Minato-ku, Tokyo; Masahiro Omura, Representative Director)
2. Details of the Request
(1) Subject matters of the meeting of shareholders
1) Dismissal of six (6) Directors
To dismiss six (6) Directors of the Company (Messrs. Isao Sawada, Matahiro Daisai, Osamu Sudo,
Yuko Tashiro, Tomohisa Tafuchi, and Mitsuru Maekawa)
Note: The above 6 Directors comprise all of the Company's Outside Directors and are all designated as Independent Directors.
2) Election of five (5) Directors
To elect five (5) executives of the Shareholders (Messrs. Emi Miura, Hironobu Fukushima, Akitomo
Nakajima, Masahiko Nomaguchi, and Tatsuya Ikeda) as Directors of the Company
(2) Reasons for convening
The Shareholders believes that for the improvement in shareholder value through the outright asset-light and shareholder return strategies by the Company, it is imperative to immediately approve the above proposals stated in (1). Please see the Attachment for reasons for the respective proposals.
3. Policies for dealing with the Request
We will inform you about policies of the Board of Directors of the Company regarding the Request as soon as our decision is made, after carefully examining the details of the Request and others.
4. Others
At the end of the Request, it is stated that "In the event that the replacement of outside directors is no longer required (e.g., when the current management of your company makes an announcement of its determination to realize the shareholder returns at the same level as those we propose), we will withdraw our request to convene a meeting of shareholders."
Please note that there will be no change resulting from the Request in the New Mid-Term Management Plan released by the Company on May 23, 2014 and in the tender offer for its own shares as described in the press release of August 4, 2014 (corrected on August 5), "Notice Regarding Acquisition of the Company's Own Shares and Tender Offer for the Company's Own Shares."
[For inquiries, contact] (Monday-Friday, 9:00-17:00) Accordia Golf Co., Ltd.
Investor Relations (K. Nose)
TEL: [phone] (Audio guidance) E-mail: [e-mail]
Attachment
Note: The following are excerpts from the letter of request from the Shareholders to convene an extraordinary meeting of shareholders regarding reasons for proposing subject matters of the meeting of shareholders and reasons for convening an extraordinary meeting of shareholders. The Company's view on these descriptions will be separately announced.
(Reasons for proposing the subject matters of the meeting of shareholders)
1) Reasons for the proposal of dismissal of six (6) Directors
The Company is not committed to appropriate corporate governance; e.g., it proposed a 90% payout ratio at a time of a hostile TOB challenged by PGM Holdings K.K., however, this time shows its intention to cut it down to half (45%). Apparently, the Company's outside directors do not fulfill their roles as expected, such as to strengthen compliance and governance structures.
The Company also vowed to advance the outright asset-light strategy initially in the year 2013. However, the business trust (hereinafter "BT")-based asset-light strategy announced in March 2014 was targeted at only 90 of its 134 golf courses (nearly half in asset size). As to the future additional asset-light strategy, the Company has not yet disclosed any specific plans while proposing the separation of 50 to 60% of its fixed assets. In this respect, the requesters (namely, Reno Co., Ltd., C&I Holdings Co., Ltd., Minami-Aoyama Fudosan LLC, and City Index Hospitality Co., Ltd., hereinafter the same shall apply), as major shareholders, have asked the Company repeatedly to immediately disclose such specific plans. The current management of the Company disclosed its plan yesterday after the BT was listed, as it had explained to us before; nevertheless, its size was rather small as an additional asset-light strategy, falling far short from the aspect of maximization of shareholder value.
As we find the outside directors, who should essentially think from a shareholder's point of view, not performing such function (although newly appointed outside directors are included, the existing policies of the board of directors are confirmed), we propose to dismiss all of six (6) outside directors.
2) Reasons for the proposal of election of five (5) Directors
The Company does not seem to be committed to appropriate corporate governance; e.g., it proposed a 90% payout ratio at a time of a hostile TOB challenged by PGM Holdings K.K., however, this time shows its intention to cut it down to half (45%).
In addition, the requestors believe that it is possible to execute not less than 40 billion yen additional asset-light strategy within two years after the BT-based asset-light strategy is implemented and to realize not less than 20 billion yen shareholder returns, including dividends of surplus based on the policy proposed by the Company's current management (45% of deemed net income), over the two fiscal years (fiscal year ending March 31, 2016 and fiscal year ending March 31, 2017). Thus, we request the election of five (5) directors as qualified outside directors. We also propose that the incumbent four (4) executive directors should basically manage the Company's business operations, while five (5) new outside directors to be elected shall be committed to the outright shareholder return strategy with a focus on the Company's capital policy, and that whether they shall retire or not shall be determined on completion of their function.
We believe that whether the above shareholder returns shall be made in a form of dividends of surplus or acquisition of own shares must be consulted with the Company's shareholders.
If most of the proceeds from sales under the asset-light strategy are required to be repaid to banks, the requestors will also consider financing by lending necessary funds to the Company on the same terms as its current terms with financial institutions.
(Reasons for convening an extraordinary meeting of shareholders)
Due to the reasons for the respective proposals stated above, the requesters believes that for the improvement in shareholder value through the outright asset-light and shareholder return strategies of the Company, it is imperative to promptly approve the above proposals. Therefore, we request to hold an extraordinary meeting of shareholders.
However, in the event that the replacement of outside directors is no longer required (e.g., when the current management of the Company makes an announcement of its determination to realize the shareholder returns at the same level as those proposed by the requestors), we will withdraw our request to convene a meeting of shareholders.