Itochu Enex : Notice of Reorganization and Integration of the Liquefied Petroleum Gas (LPG) Wholesale and Retail Businesses (30KB)

This document is an English translation of a news release on August 3, 2017, made initially in Japanese. The Japanese original should be considered as the primary version.

Company: Itochu Enex Co., Ltd.

Representative: Kenji Okada, Representative Director, President and CEO Stock code: 8133, Tokyo Stock Exchange, 1st Section

Contact: Masahiko Aoyagi

Manager for Corporate Communications Office Tel: [phone]

Notice of Reorganization and Integration of

the Liquefied Petroleum Gas (LPG) Wholesale and Retail Businesses

Itochu Enex Co., Ltd. (Kenji Okada, President and Chief Executive Officer; hereinafter "Itochu Enex") and OSAKA GAS CO., LTD. (Takehiro Honjo, President; hereinafter "Osaka Gas") hereby announce to establish "ENEARC Co., Ltd. (provisional name; hereinafter "ENEARC")" as a joint venture company in which each company will own a 50% stake on October 1, 2017, to integrate the wholesale and retail businesses of liquefied petroleum gas (hereinafter "LPG") in each of the Kanto, Chubu and Kansai regions, and to begin examination into further reorganization in the future. Both companies have also agreed that all the owned shares of the three LPG sales companies owned by Osaka Gas's subsidiary, NISSHO PETROLEUM GAS CORPORATION (hereinafter "Nissho LP") will be transferred to the Itochu Enex Group on October 1, 2017.

1. Background and objective

   The LPG industry finds itself in a tough business environment due to the softening demand brought about by declining numbers of households and competition from other energy. This situation urgently requires productivity to be improved through the expansion of the business base and the boosting of cost competitiveness. In view of this situation, both companies believe that it is necessary to provide higher quality and strongly competitive products and services, and that the way to provide these is to achieve greater efficiency by sharing each other's strengths and knowhow in a cooperative framework to realize synergy, consolidate business resources, and reorganize business operations.

2. About the new company ENEARC

   ENEARC will be established as a joint venture company in which each company will own a 50% stake. The objective of its establishment is to strengthen the LPG wholesale and retail businesses in the Kanto, Chubu and Kansai regions. ENEARC will own the shares of both companies' six LPG sales companies operating in the Kanto, Chubu and Kansai regions (three companies under Itochu Enex's umbrella: ITOCHU ENEX HOME-LIFE KANTO CO., LTD. (hereinafter "HOME-LIFE KANTO"), ITOCHU ENEX HOME-LIFE CHUBU CO., LTD. (hereinafter "HOME-LIFE CHUBU"), and ITOCHU ENEX HOME-LIFE KANSAI CO.,

   LTD. (hereinafter "HOME-LIFE KANSAI"); and three companies under Osaka Gas's umbrella: Osaka Gas LPG Co., Ltd. (hereinafter "Osaka Gas LPG"), Nissho Gas Supply Co., Ltd. (hereinafter "Nissho Gas Supply") and Daiya Nensho Co., Ltd. (hereinafter "Daiya Nensho") and move toward full integration within twelve months, integrating the sales companies of the same region, one region at a time. In addition, ENEARC will aim to achieve further growth through alliances with new business partners.

3. Regarding business reorganization outside the Kanto, Chubu and Kansai regions

   On October 1, 2017, Itochu Enex will acquire all the owned shares of Nissho LP's subsidiary Nissho Propane Sekiyu Co., Ltd. (hereinafter "Nissho Propane Sekiyu"), and Itochu Enex's subsidiary ITOCHU ENEX HOME-LIFE NISHI-NIHON CO., LTD. (hereinafter "HOME-LIFE NISHI-NIHON") will acquire all the owned shares of Nissho LP's subsidiaries Ehime Nissho Propane Co., Ltd. (hereinafter "Ehime Nissho") and Kochi Nissho Propane Corporation (hereinafter "Kochi Nissho").

   Looking forward, both companies will contribute to society as LPG suppliers that provide a higher level of transparency in prices and ensure disaster response and stable supply through their broader network. Furthermore, through providing high-quality lifestyle services, both companies aim to reform companies active in the home-life services field.

4. Future outlook

   Although this matter is expected to have an immaterial impact on the consolidated financial results of Itochu Enex, an announcement will be made promptly if this matter is determined to have a material impact on the consolidated financial results in the future.

   (Attachment)

5. Regarding the reorganization and integration of businesses

6. Kanto, Chubu, and Kansai regions

   Itochu Enex Osaka Gas

   50% 50%

   The new company ENEARC

   100% HOME-LIFE KANSAI 100% HOME-LIFE CHUBU 100% HOME-LIFE KANTO

   100% Osaka Gas LPG 78% Daiya Nensho 100% Nissho Gas Supply

7. Outside the Kanto, Chubu, and Kansai regions

Itochu Enex

100% HOME-LIFE HOKKAIDO

100% Nissho Propane Sekiyu

100% HOME-LIFE TOHOKU

100% HOME-LIFE NISHI-NIHON

66.7% Ehime Nissho

100% Kochi Nissho

51%ECORE

8. Company Overviews

1. ENEARC Co., Ltd. (provisional name)

   Location	2-10-1, Toranomon, Minato-ku, Tokyo
   Established	October 1, 2017
   Capital	¥1,040 million
   Representative	To be determined
   Activities	Overarching management of sales companies in the Kanto, Chubu and Kansai regions
   Number of employees	To be determined

2. Itochu Enex Co., Ltd.

   Location	2-10-1, Toranomon, Minato-ku, Tokyo
   Established	January 1961
   Capital	¥19,800 million
   Representative	Kenji Okada
   Activities	Sales of petroleum products and LPG, automobile-related business, electric power business, and other related businesses
   Total trading transactions	¥1,028.9 billion (fiscal year ended March 31, 2017: consolidated)
   Number of employees	510 (as of March 31, 2017: non-consolidated)

3. OSAKA GAS CO., LTD.

   Location	4-1-2, Hiranomachi, Chuo-ku, Osaka-shi, Osaka
   Established	April 1897
   Capital	¥132,100 million
   Representative	Takehiro Honjo
   Activities	Production and delivery of gas, sales of LPG, generation and sales of electricity, and other businesses
   Total trading transactions	¥1,183.8 billion (fiscal year ended March 31, 2017: consolidated)
   Number of employees	5,731 (as of March 31, 2017: non-consolidated)

4. NISSHO PETROLEUM GAS CORPORATION

Location	1-1-30, Shibadaimon, Minato-ku, Tokyo
Established	September 2000
Capital	¥1,700 million
Representative	Koichi Sawada
Activities	Import and sales of LPG, LNG and petroleum products
Total trading transactions	¥33.3 billion (fiscal year ended March 31, 2017: consolidated)
Number of employees	7 (as of March 31, 2017: non-consolidated)