Useless cross-shareholdings | 蝶理の株主価値向上に向けて
What we hope Chori to increase the shareholders' value as a shareholder are
1.Drastic increase in dividend / share buyback to prevent further lowering of ROE
2.Dissolution of cross-shareholdings
3.Transform to a board led by independent outside directors

Useless cross-shareholdings

Chori holds listed shares of 35 companies as cross-shareholdings which reach JPY 4,674 million in FY 2017. Share of Wacoal Holdings Corp. (hereinafter referred to as “Wacoal”) with JPY 2,012 million accounts for almost half of them.

Change of cross-shareholdings and Wacoal share Chori holds

(Source:QUICK ASTRA MANAGER、data in FY18 is calculated by Strategic Capital)

We had dialogue with Wacoal in June 2015 and asked Wacoal “what would you do if your clients sell your shares?”
Wacoal answered “it was true that we used to ask our clients to hold our (Wacoal’s) share as stable shareholders, however, now we do not care if they sell our shares and there is no effect on the transaction between us and the client.”.
Therefore, we conveyed this attitude of Wacoal regarding cross-shareholdings to Chori, but the board of Chori decided to continue holding Wacoal share because they judged it is worth holding to keep / increase business transactions.

Chori states the policy of the holding and reduction of cross-shareholdings in the Corporate Governance Report as followings.

Policy regarding the holding and reduction of cross-shareholdings
Chori and Chori’s subsidiaries might buy / hold listed companies shares to keep / increase / develop businesses. In that case, we assign a certain section that is responsible for the acquisition of shares and the section analyses the business circumstances / profitability of such investment. The board decides whether to hold it or not according to the analysis above. We execute annual review on each share and if such review shows the holding of a certain share is useless, Chori considers to sell it and tries to reduce cross-shareholdings.

Business relationship is to be obtained through competences such as quality of product / service. We cannot understand why holding shares leads to business development.
Even if holding shares affect to business development positively in some cases, there is no reason to hold Wacoal share despite the abovementioned attitude of Wacoal regarding cross-shareholdings that holding its share has nothing to do with business development.

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