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 the Company's 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 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*1 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 is 2.500%*1, at a price of ¥4,000 per share, total amount at issuance price ¥120 billion), and listed the Bond-Type Class Shares on the Tokyo Stock Exchange Prime Market on November 2, 2023.
Series 1
Bond-Type Class Shares
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. |
| Condition for acquisition (Repurchase the shares in cash by the Company) | After 5 years from the date of issuance, the Company has the option to repurchase (call) the shares for an amount equal to the issuance price, adjusted for accrued dividends and other adjustments, in cash*2. |
| Press releases |
Notice Regarding Determination of Annual Dividend Rate of Series 1 Bond-Type Class Shares |
Comparison
with Common Shares
| Series 1 Bond-Type Class Shares | Common Shares | |
|---|---|---|
| Security code | 94345 | 9434 |
| Issuance price/stock price | ¥4,000*3 | ¥1,707.5*4 |
| Annual dividend rate/yield | Fixed annual dividend rate 2.500%*1 (A fixed dividend for approximately 5 years from the issuance, floating after that) |
Dividend yield 5.04%*5 |
| Cash repurchase (call) at an amount equivalent to the issuance price by the Company*2 | Possible | - |
| Rights to vote | None | Yes |
| Rights to convert into common shares | None | - |
| Number of shares constituting one trading unit | 100 shares | 100 shares |
Frequently asked questions
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What is the use of proceeds from Series 1 Bond-Type Class Shares?
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The proceeds will be used to contribute to the medium- to long-term enhancement of corporate value, such as the realization of services using generative AI, 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.
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Is it planned to acquire (call) the Series 1 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 when the dividend rate is stepped up.
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Does the Series 1 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 Bond-Type Class Shares (PDF: 495KB/4 pages)
- [Notes]
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- *1If the record date falls in a fiscal year ending on or before March 31, 2029: 2.500% per annum. (The amount of the Preferred Dividend to Series 1 Bond-Type Class Shares with a record date of March 31, 2024 will be ¥41.53 (calculated based on actual day counts on a 366-day year basis)).
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 before the last day of the fiscal year before the fiscal year in which the record date falls plus 3.182%. Furthermore, the 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. - *2As a general rule, after 5 years from the date of issuance, the Company has the option to repurchase (call) the shares for an amount equal to the issuance price, adjusted for accrued dividends and other adjustments, in cash. In addition, similar to hybrid bonds, due to refinancing restrictions, when the Company repurchases (calls) the Series 1 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 through an amendment.
- *3Please click here (in Japanese) for the current share price of the Series 1 Bond-Type Class Shares.
- *4The stock price of common shares as of November 1, 2023.
- *5Dividends per Share for FY2023 (forecast) (¥86) / Stock price (¥1,707.5 as of November 1, 2023)
- *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.