Jul 1, 2014

Kobe-Osaka Int'l Port Corp. to kick off operation with Y900 million capital/reserve

The Osaka Port Corp. and Kobe Port Terminal Corp. (KPTC) on June 30 disclosed the directors, capital and other aspects of the Kobe-Osaka International Port Corp., their integrated company. The new company will have eight executive officers at the onset of its operation, with those affiliated with Osaka and Kobe ports pegged at the same number. It will have a capital of Y450 million and reserve fund of Y450 million. The number of its employees is projected to reach a little less than 90 people, including the directors.

The establishment of the new company was passed through a resolution at the board meetings on June 26 and June 27 at Osaka Port Corp. and KPTC, respectively, with an agreement between the two entities reached on June 30. The resolution is expected to be approved at the extraordinary shareholders' meetings at both ports that are slated to be convened on August 20.

Kobe-Osaka International Port Corp. will be established on October 1. Osaka and Kobe ports will split their terminal operation segment and other businesses and transfer them to the new firm. The new company will operate by leasing the facilities of the two ports that own/manage the assets.

The new company will be put up through the method in which a business is divested toward the establishment of a joint venture whose shares will be allotted to the shareholders of the divesting entities. At present, the shareholders of the port companies are their respective city governments and private financial institutions. The two companies will acquire their own shares in the new venture, but they will divest their terminal operation business and other divisions and then transfer them to Kobe-Osaka International Port Corp. In exchange, the new company will transfer its shares to both port operators and then the two port companies will give the shares they received to Osaka and Kobe cities.

Kobe-Osaka International Port Corp. will issue 18,000 shares upon establishment, with the Osaka and Kobe cities owning 9,000 shares each. The shares will be priced at Y50,000 per share upon issuance.

After its establishment, the new company will allocate new shares to third parties - government and private financial institutions - within fiscal 2014 toward boosting its total capital and reserve funds to about Y1.5 billion. Of this amount, the amount that will be injected into its capital has yet to be determined. The government is projected to invest around Y500 million into the new firm, but the amount of investment by the private financial institutions remains to be seen. With regard to private banks, Osaka Port Corp. is currently funded by the Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. (SMBC) and Mizuho Corporate Bank, while KPTC is backed by SMBC. It is envisioned that the above new shares will be allocated to these banks.

The new company will initially have eight executive officers, with external directors hailing from private institutions scheduled to join the team later on. Employees from the two port companies will basically be transferred to the new firm. The integration of their wage systems has already been completed. Now the salary levels at both companies were virtually on a par, but the minor differences have apparently been aligned with KPTC's regulations.

The board of directors at the establishment of Kobe-Osaka International Port Corp. will be as follows. (Titles have been omitted and their current positions are indicated by the parentheses.)

*Representative director: Yasuo Inubushi (president, KPTC)
*Representative director: Yoshifumi Kawabata (president, Osaka Port Corp.)
*Director: Ryohei Teramoto (vice-president, Osaka Port Corp.)
*Director: Mitsuo Nakamura (managing director, Osaka Port Corp.)
*External director: Takayuki Tokuhira (director-general, Port of Osaka)
*External director: Makoto Yoshii (director-general, Port of Kobe)
*External auditor: Katsuhiko Kuroda (external auditor, Osaka Port Corp., and professor emeritus, Kobe University)
*External auditor: Hajime Moriwaki (lawyer and external auditor, Osaka Port Corp.)

The headquarters of the new company will be located at the 20th floor of the Kobe International House, 8-1-6 Miyuki-dori, Chuo-ku, Kobe. Parts of the existing offices in Osaka and Kobe will be retained.

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