Bond-Type Class Shares
We consider the return of profits to shareholders to be an important goal for our management along with increasing medium- to long-term corporate value. In order to continue to balance growth investment with a high level of shareholder returns, we believe it is desirable to further enhance our capital and reinforce its financial base.
Against this backdrop, we issued the Bond-Type Class Shares as a financing method to increase equity capital that would minimize the impact on the interests of existing holders of our common shares of the Company as much as possible.
Bond-Type Class Shares are “shares”, a type of equity in accordance with the Companies Act while also possessing characteristics similar to “bonds”. The Bond-Type Class Shares we issued do not have the right to convert into common shares or voting rights, but they entitle the holder to receive a fixed dividend for approximately 5 years from the date of issuance. Although it will depend on market conditions, taking into account the product nature of the position between equity and debt, we anticipate the annual dividend rate of Bond-Type Class Shares to be within a range from the coupon of our senior bonds to the dividend yield on our common shares.
We issued 30 million shares of Series 1 Bond-Type Class Shares on November 1, 2023 (annual dividend rate 2.500%*1, ¥4,000 per share, total amount at issuance price ¥120 billion) and 25 million shares of Series 2 Bond-Type Class Shares on October 3, 2024 (annual dividend rate 3.200%*2, ¥8,000 per share, total amount at issuance price ¥200 billion). Both Bond-Type Class Shares have been listed on the Tokyo Stock Exchange Prime Market since the business day following each issuance date.
Features and
general information
Preferred dividend | A fixed dividend for approximately 5 years from the issuance and floating dividend thereafter*1. |
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Liquidity | To attract a wide range of investors, we have listed the shares on the Tokyo Stock Exchange Prime Market, providing opportunities for trading. |
Rights to vote and convert to common shares | There are no voting rights or conversion rights to common shares. |
Acquisition (Acquisition by us in Exchange for Cash) | After the elapse of 5 years from the date of issuance, etc., we have the option to acquire (call) the shares in exchange for cash at an amount equal to the issue price, adjusted for accrued dividends and other adjustments*3. |
Use of proceeds | The proceeds will be used to finance capital expenditures for growth investments that will contribute to the medium- to long-term enhancement of corporate value, such as the realization of services using generative AI, and the construction of Next-generation Social Infrastructure, and the development and procurement of renewable energy, as well as capital expenditures for base stations, network facilities, etc. |
Press releases |
Notice Regarding Determination of Annual Dividend Rate of Series 1 Bond-Type Class Shares |
Preferred dividend | A fixed dividend for approximately 5 years from the issuance and floating dividend thereafter*2. |
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Liquidity | To attract a wide range of investors, we have listed the shares on the Tokyo Stock Exchange Prime Market, providing opportunities for trading. |
Rights to vote and convert to common shares | There are no voting rights or conversion rights to common shares. |
Acquisition (Acquisition by us in Exchange for Cash) | After the elapse of 5 years from the date of issuance, etc., we have the option to acquire (call) the shares in exchange for cash at an amount equal to the issue price, adjusted for accrued dividends and other adjustments*3. |
Use of proceeds | The proceeds will be used to finance growth investments that will contribute to the medium- to long-term enhancement of corporate value, such as the realization of services using generative AI, and the construction of Next-generation Social Infrastructure. |
Press releases |
Notice Regarding Determination of Annual Dividend Rate of Series 2 Bond-Type Class Shares |
Comparison
with Common Shares
Bond-Type Class Shares | Common Shares | ||
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Series 1 | Series 2 | ||
Security code | 94345 | 94346 | 9434 |
Issue price/share price | ¥4,000*4 | ¥8,000*4 | ¥189.9*5 |
Annual dividend rate/yield |
- March 31, 2029 April 1, 2029 - |
- March 31, 2030 April 1, 2030 - March 31, 2050 April 1, 2050 - |
Dividend yield 4.53%*6 |
Acquisition (call) by us in exchange for cash*3 | Possible | Possible | - |
Rights to vote | None | None | Yes |
Rights to convert into common shares | None | None | - |
Number of shares constituting one trading unit | 100 shares | 100 shares | 100 shares |
Frequently asked questions
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Is it planned to acquire (call) the Bond-Type Class Shares in exchange for cash after 5 years from the issuance?
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We will determine whether to acquire (call) the Bond-Type Class Shares in exchange for cash, taking into consideration our business and financial strategy at the time, market conditions and other factors. We fully understand that, as is customary in the market for hybrid financing, many investors expect to be called by the time the dividend rate is stepped up.
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Does the Bond-Type Class Shares offer shareholder benefits?
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Not offered.
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For other frequently asked questions, please refer to the following.
Q&A regarding Series 1 Bond-Type Class Shares (PDF: 495KB/4 pages)
- [Notes]
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- *1(Regarding the annual dividend rate of the Series 1 Bond-Type Class Shares) If the record date falls in a fiscal year ending on or before March 31, 2029: 2.500% per annum. If the record date falls in a fiscal year ending on or after April 1, 2029: The interest rate of One-Year Japanese government bonds (JGBs) as of the date two business days immediately before the last day of the fiscal year before the fiscal year in which the record date falls plus 3.182%. Furthermore, the Series 1 Bond-Type Class Shares are “cumulative”, meaning that any unpaid dividends shall be carried over to subsequent fiscal years. They are also “non-participating,” which means that no dividend is paid beyond the preferred dividend initially set. The amount of the Preferred Dividend to Series 1 Bond-Type Class Shares with a record date of March 31, 2024 was ¥41.53 (calculated based on actual day counts on a 366-day year basis).
- *2(Regarding the annual dividend rate of the Series 2 Bond-Type Class Shares) If the record date falls in a fiscal year ending on or before March 31, 2030: 3.200% per annum. If the record date falls in a fiscal year ending between April 1, 2030 and March 31, 2050: The interest rate of One-Year Japanese government bonds (JGBs) as of the date two business days before the last day of the fiscal year immediately before the fiscal year (the “Annual Rate Quotation Date”) in which the record date falls plus 2.960%. If the record date falls in a fiscal year ending on or after April 1, 2050: The interest rate of One-Year Japanese government bonds (JGBs) as of the Annual Rate Quotation Date with respect to the fiscal year in which the record date falls plus 3.710%. Furthermore, the Series 2 Bond-Type Class Shares are “cumulative”, meaning that any unpaid dividends shall be carried over to subsequent fiscal years. They are also “non-participating,” which means that no dividend is paid beyond the preferred dividend initially set. The amount of the Preferred Dividend to Series 2 Bond-Type Class Shares with a record date of March 31, 2025 will be ¥126.24 (calculated based on actual day counts on a 365-day year basis).
- *3In general, after 5 years from the date of issuance, we have the option to acquire (call) the shares in exchange for cash at an amount equal to the issue price, adjusted for accrued dividends and other adjustments. In addition, similar to hybrid bonds, due to refinancing restrictions, when we acquire (calls) the Bond-Type Class Shares, it is required to raise capital funds of equal or greater amount. Therefore, in order to have the ability to issue additional Bond-type Class Shares if the acquisition provisions are exercised, we have established an authorization framework for up to the 5th issuance in our Articles of Incorporation.
- *4Please refer to Series 1 Bond-Type Class Shares and Series 2 Bond-Type Class Shares for current share prices (in Japanese).
- *5The share price of common shares as of October 3, 2024.
- *6Dividends per Share for FY2024 (forecast) (¥8.6) / Share price (¥189.9 as of October 3, 2024)
- *1
- Disclaimer
The information of this page is not for the purpose of soliciting investment or engaging in any other similar activities in Japan or any foreign country. This presentation does not constitute an offer of securities in the United States. The Company's securities referred to in this presentation have not been, and will not be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration thereunder or an applicable exemption from registration requirements.