3D Investment Partners Requests Toshiba Corporation Convene an EGM

TOKYO, Jan. 5, 2022 /PRNewswire/ -- 3D Investment Partners Pte. Ltd. (together with the funds it manages, "3D," "we" or "us"), today requested that Toshiba Corporation ("Toshiba" or the Company") (6502.T) convene an extraordinary general meeting of shareholders ("EGM") and made two proposals for shareholders to consider at the EGM.

Summary of the Proposals

View PDF

3D is offering two proposals for a vote at the EGM:

• Proposal 1 would amend Toshiba's Articles of Incorporation to require the implementation of Toshiba's proposed plan, announced on November 12, 2021, to separate into three standalone companies (the "Separation Plan" or the "Plan"). While we are opposed to this resolution because we believe the Plan was the result of a flawed process and fails to address the underlying issues at Toshiba, we strongly believe all shareholders should have an opportunity to vote on the future direction of the Company.
  
  
  Specifically, the proposal would amend the Articles of Incorporation to include a new section that would read: "The Company shall implement any strategic reorganization plan developed by the Strategic Review Committee of the Board (which was formed on June 25, 2021) and approved by the Board, in a manner and timeframe to be determined by the Board and subject to approvals and other legal requirements of the Companies Act and other applicable laws; for the avoidance of doubt, the "Strategic Reorganization to Separate Into Three Standalone Companies" plan, which was announced by Toshiba on November 12, 2021, shall be considered a "strategic reorganization plan" for purposes of this Article 32."
  
  
  3D will vote AGAINST this proposal.
  
  
• Proposal 2 requests that the Strategic Review Committee of the Board of Directors (the "SRC") consider anew all alternatives for enhancing corporate value at Toshiba. We are convinced that a better, more transparent process would have yielded better alternatives for Toshiba, and we support this proposal.
  
  
  Specifically, the proposal reads: "The shareholders hereby request the Strategic Review Committee and the Board of Directors to continue their strategic review to ensure all alternatives are fully considered and measured against the Reorganization Plan that has been previously recommended, including by (i) actively engaging in discussions regarding a going-private transaction or minority investment in the Company, and (ii) regularly reporting in detail to shareholders on all efforts, proposals received, and matters evaluated.
  
  
  3D will vote FOR this proposal.

The Strategic Alternatives Process Was Flawed

3D is gravely concerned that the strategic review process that resulted in the Separation Plan was inadequate because it failed to consider a full range of alternatives. By its own admission, the SRC failed to ask for, or receive, proposals for the sale of the entire Company or the disposition of individual business units. The SRC also failed to contact any potential strategic acquirors. Further, we believe the SRC terminated discussions prematurely with a private equity firm that expressed interest in making a large minority investment.

Instead of pursuing these various alternatives to create value, the SRC decided that maintaining the status quo, with some minor reshuffling of business units into different corporate entities, is the prescription for success. 3D believes that this split was favored by management and may serve the interests of management in the sense that it will increase the number of management posts, but that it is unlikely to enhance value. Furthermore, 3D believes the SRC should have more completely explored other alternatives.

A Shareholder Vote on the Separation Plan (Proposal 1)

While we do not believe that the SRC's plan to split Toshiba into three separate entities will resolve any of Toshiba's current execution, cultural, capital allocation or governance problems, we believe that it is critical that all Toshiba shareholders be afforded the opportunity to express their views regarding the optimal path forward for the Company. 3D notes that the affirmative consent of two-thirds of Toshiba's shareholders will ultimately be required in order to effect the Separation Plan. There is no rationale for pursuing at great expense the Separation Plan without knowing whether a sufficient number of Toshiba shareholders will ultimately provide consent.

Rather than waiting for Toshiba to hold that vote, 3D is requesting that Toshiba convene an EGM so that shareholders can vote now on an amendment to the Company's Articles of Incorporation which would require the Company to implement the Separation Plan. This EGM ensures that all shareholders have the opportunity to express their opinions on the Separation Plan. In addition, since the proposal is an amendment to the Articles of Incorporation, the proposal requires approval by two-thirds of the shareholders, which is the same level of support that is ultimately required for the Company to complete the Separation Plan. If the amendment to the Articles of Incorporation is supported by two-thirds of shareholders (and is therefore approved by shareholders), Toshiba can have confidence in proceeding with the Separation Plan; if the amendment fails to garner the support of two-thirds of shareholders, Toshiba should spend no further corporate resources on the Separation Plan and should pursue other ways of enhancing corporate value.

Proposal to Review All Alternatives Completely (Proposal 2)

3D intends to offer a second proposal at the EGM.

If passed, Proposal 2 would request that the SRC review all options to increase the corporate value of Toshiba, including by actively soliciting proposals from private equity firms and potential strategic acquirors, and regularly report in detail to shareholders on all efforts made, proposals received and matters evaluated. We believe all Toshiba stakeholders would benefit from a new, objective and complete review of opportunities to enhance Toshiba's value. We also believe that improved transparency will provide stakeholders with confidence in the actions of the Board.

We encourage all Toshiba shareholders to cast their vote at the forthcoming EGM to ensure Toshiba is on the best path for all stakeholders.

About 3D Investment Partners Pte.

3D Investment Partners Pte. Ltd. is an independent Singapore-based Japan focused value investing fund manager founded in 2015. 3D Investment Partners Pte. Ltd. focuses on partnering with managements who share its investment philosophy of medium- to long-term value creation through compound capital growth and a common objective of achieving long-term returns.

Disclaimer

This press release is provided for informational purposes only and does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional or investment advice. This press release should not be relied on by any person for any purpose and is not, and should not be construed as investment, financial, legal, tax or other advice.

3D Investment Partners Pte. Ltd. and its affiliates and their related persons ("3DIP") believe that current market price of Toshiba does not reflect its instinct value. 3DIP acquired beneficially and/or economic interest based on its own idea that Toshiba group securities have been undervalued and provides attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, Toshiba group securities. 3DIP intends to review its investments in the Toshiba group on a continuing basis and, depending upon various factors including, without limitation, the Toshiba group's financial position and strategic direction, the outcome of any discussions with Toshiba, overall market conditions, other investment opportunities available to 3DIP, and the availability of Toshiba group securities at prices that would make the purchase or sale of Toshiba group securities desirable, 3DIP may, from time to time (in the open market or in private transactions), buy, sell, cover, hedge, or otherwise change the form or substance of any of its investments (including the investment in Toshiba securities) to any degree in any manner permitted by any applicable law, and expressly disclaims any obligation to notify others of any such changes.

No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness, or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets, or developments referred to herein. 3DIP expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents as a whole or in part by any person, or otherwise howsoever arising in connection with this press release.

3DIP disclaims any intention or agreement to be treated as a joint holder (kyodo hoyu sha) under the Financial Instruments and Exchange Act of Japan, a closely related party (missetsu kankei sha) under the Foreign Exchange and Foreign Trade Act with other shareholders, or receiving any power to represent other shareholders in relation to the exercise of their voting rights by virtue of its act to express its views, estimates, and opinions or otherwise to engage in dialogue with other shareholders through this press release.

3 DIP does not have the intention to make a proposal, directly or through other shareholders of Toshiba, to transfer or abolish the business or asset of Toshiba and/or Toshiba group companies at the general shareholders meeting of Toshiba. 3DIP does not have the intention and purpose to engage in any conduct which constricts the continuing and stable implementation of business of Toshiba and/or Toshiba group companies. 3DIP does not have the intention to attend or have any person appointed by 3DIP attend the meeting of the board of directors or committee that has the power to make material decision of Toshiba concerning the business of Toshiba and/or Toshiba group companies either.

3DIP does not have the intention to require an answer or certain conduct to members of the board of directors or committee that has the power to make material decision of Toshiba, by itself or through any person appointed by 3DIP, concerning the business of Toshiba and/or Toshiba group companies within certain time period.

This press release may include content or quotes from news coverage or other third party sources ("Third Party Materials"). Permission to quote from Third Party Materials in this press release may neither have been sought nor obtained. The content of the Third Party Materials has not been independently verified by 3DIP and does not necessarily represent the views of 3DIP. The authors and/or publishers of the Third Party Materials are independent of, and may have different views to 3DIP. The quoting Third Party Materials on this press release does not imply that 3DIP endorses or concurs with any part of the content of the Third Party Materials or that any of the authors or publishers of the Third Party Materials endorses or concurs with any views which have been expressed by 3DIP on the relevant subject matter. The Third Party Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues.

In respect of information that has been prepared by 3DIP (and not otherwise attributed to any other party) and which appear in the English language version of this press release, in the event of any inconsistency between the English language version and the Japanese language version of this press release, the meaning of the English language version shall prevail unless otherwise expressly indicated.

Contacts

3D Investment Partners Pte. Ltd.
[email protected] 

SOURCE 3D Investment Partners Pte. Ltd.