Kawasaki’s Environmental Business to Become a Subsidiary

Jun. 27, 2006

 

 Tokyo, June 27, 2006 – Based on decisions made at the Board Meeting held today, Kawasaki Heavy Industries, Ltd. (KHI) announced that it will merge the Company’s environmental business with Kawasaki Environmental Plant Engineering Co., Ltd. on October 1, to form a new wholly owned subsidiary, Kawasaki Environmental Engineering, Ltd. (KEE).

 The new entity will pursue more agile business operations and boost management efficiency and cost competitiveness. KEE anticipates rapid growth, supported by Kawasaki’s allocation of resources toward core technology development and its extensive track record in the development and application of new technologies. As environmental conservation becomes increasingly important, the new company will contribute to the prevention of global warming and the pursuit of sustainability by providing cutting-edge recycling technologies and enabling the efficient reuse of waste heat from refuse treatment processes.

 KHI has expanded its environmental business by developing technologies that meet a diversity of applications in the municipal refuse, industrial waste treatment and recycling facility markets. There has been limited demand and keen cost competition in both municipal and industrial markets. Although increased demand is expected within the next few years as municipal incinerators start coming up for renewal, the overall market environment will continue to be harsh.

 KHI will provide management support — including business opportunities, technologies and funding — to KEE. It will also implement policies that fully demonstrate the collective strengths of the KHI Group, with the aim of further increasing the corporate value of the Group as a whole.

Overview of the New Company

Name Kawasaki Environmental Engineering, Ltd.
Business Design, construction, installation, maintenance and sales of incinerators, industrial waste treatment facilities, recycling facilities and water treatment facilities.
Headquarters Chuo-ku, Kobe, Hyogo Prefecture, Japan
President
and Representative Director		 Shuichi Morioka
Board of Directors
Chairman : Takashi Yoshino
President : Shuichi Morioka
Managing Director : Sadahiro Uji
Directors   Kunio Fukuyama
    Toshiyuki Mimura
    Futoshi Miura
    Shuichi Yamanaka
Auditors : Koji Takada
    Yuji Murakami
    Shunsaku Ban
Capital ¥3.5 billion
Shares outstanding 70,000 shares
Shareholder Equity Approx. ¥8.3 billion (projection for Oct. 1, 2006)
Total Assets Approx. ¥20.0 billion (projection for Oct. 1, 2006)
Annual Sales Approx. ¥30.0 billion (projection for fiscal year ending March 31, 2008)
Employees Approx. 310 (projection for Oct. 1, 2006)

Note: In accordance with Article 784-3 of Corporate Law, KHI will carry out the separation without submitting the scheme for approval at its General Meeting of Shareholders. Under this scheme (summary absorption-type demerger), Kawasaki Environmental Plant Engineering Ltd., the successor corporation, will newly issue 69,400 shares of common stock and allot all of them to KHI, the partitioning company, in exchange for KHI’s environmental engineering business. KHI decided to adopt this scheme with the aim of reforming its environmental engineering business more effectively and decisively by consolidating operations with Kawasaki Environmental Plant Engineering Co., Ltd. On the date of the separation (Oct. 1, 2006), Kawasaki Environmental Plant Engineering Co., Ltd.’s name will change to Kawasaki Environmental Engineering Ltd.