Response to Toyo Construction Co., Ltd’s (“Toyo”) (Securities Code:1890) Press Release dated June 13, 2023

Toyo stated in its latest press release dated June 13, 2023 (the "Press") that there is “suspicion” that YFO’s additional purchases of Toyo’s shares were ‘inappropriate’ or violated U.S. securities laws. Naturally, these latest desperate claims made by Toyo’s management are as unfounded as the numerous other groundless claims Toyo has made in the past year. YFO confirmed in advance of these purchases that it was in compliance with all applicable laws and regulations in both the U.S. and Japan in the specific circumstances in which it purchased Toyo’s shares. These latest "suspicions" have naturally not been raised by anyone other than Toyo’s current management.

Worse still, Kyoji Takezawa, Toyo’s current president and representative director, just a few weeks ago admitted that YFO could freely purchase additional shares in Toyo without any legal or regulatory limitations. Specifically, at a May 24, 2023 press conference Takezawa stated, "I think there will be additional [share] purchases [by YFO]. This we can't prevent." Toyo’s current management is again clearly attempting to distort peoples’ impressions by stating in the Press that "[YFO] is circumventing the purpose of the regulations on purchases of shares outside a tender offer," while admitting that YFO did not violate the regulations on purchases of shares outside a tender offer at the same time. Of course, YFO had itself confirmed and had also received confirmation from external experts that it acted in accordance with the tender offer regulations and also made[i]the appropriate information disclosures[1] regarding its purchases of Toyo’s shares after following the necessary processes.

Toyo is once again showcasing serious problems in its governance. Toyo claimed that YFO’s announcement of its planned tender offer on YFO’s English-language website (the “Website”) is suspected of violating regulations pertaining to the prohibition of additional share purchases under the U.S. Securities and Exchange Act. However, as has been written on the Website for a long time ever since it was launched, YFO may make “to the extent permitted by Japanese laws related to financial instruments transactions and other applicable laws and regulations in the ordinary course of its business and in accordance with the requirements of Rule 14e-5(b) of the United States Securities Exchange Act of 1934 … permitted purchases … at the market price in an on-the-market transaction or at a negotiated price in an off-the-market transaction,” thus proceeding in accordance with the relevant exemptions to the U.S. Securities and Exchange Act regulations that Toyo identified. Thus, Toyo’s argument is entirely groundless. Toyo is again raising factually baseless "suspicions" of violation of laws and regulations, based on erroneous speculation, without confirming even basic facts and/or deliberately making such allegations while knowing them to be false because YFO has complied with the requirements of the exemption.

Toyo’s current management introduced a poison pill against YFO’s tender offer about a year ago in the lead-up to Toyo’s 2022 AGM to eliminate any counterbids that would be inconvenient for themselves. Toyo’s management repeatedly asked and publicized completely unfounded questions about "suspicions," but were unable to deceive shareholders, and eventually withdrew the proposed poison pill the day before the 2022 AGM. Kyoji Takezawa and Toyo’s secretariat in effect acknowledged during meetings with YFO that they had withdrawn the poison pill proposal because it did not have the support of the shareholders and explained that this outcome was meaningless and not what they had wanted. Nevertheless, they repeated the same mistake this time.

As Toyo’s largest shareholder, YFO highly regards and invests in Toyo’s potential more than anyone else. From this perspective we cannot help but be disappointed with Toyo’s current management. We believe that Toyo’s current management are responding desperately in the manner described above because they see that their inconsistent and contradictory words and actions are failing to gain adequate support from shareholders and thus that their efforts to preserve their entrenched management structure may be defeated. However, if Toyo’s Board is rebuilt and reformed, YFO expects the reformed Board to be properly motivated to maximize Toyo’s corporate and shareholder value. Therefore, we aim to fix Toyo’s broken governance as soon as possible, before Toyo’s current management takes further action to damage Toyo’s credibility and corporate value. 

For further information, please contact:
Public Relations Department 
PR Agent: Vox Global Japan Co., Ltd. 
Tel: +81-3-6204-4337 Tanabe/Kuhara
Email: yfo.inquiry@voxglobalasia.com 

Shareholder Contact: Innisfree M&A Incorporated 
Tel: +1-412-232-3651 (Shareholder Contact - English)
Tel: +44-7506-004-047, +1-212-750-5833  (Financial Institutions and Institutional Investor Contact - English)

[1] Partial Amendments to "Notice Regarding Scheduled Commencement of Tender Offer for Shares of Toyo Construction Co., Ltd. (Securities Code: 1890)" (https://prtimes.jp/a/?f=d71768-47-6fbddecf280babcd068cdb27f5069a74.pdf), May 24, 2023; www.rebuildtoyo.com securities law disclaimer.