Notice Regarding the Issuance of New Shares through a Third-Party Allotment and the Disposition of Treasury Stock Accompanying a Strategic Alliance with the Sumitomo Mitsui Financial Group

At a Meeting of the Board of Directors convened on June 21, 2004, a resolution was passed whereby Promise Co., Ltd. (President: Hiroki Jinnai) will issue new shares through a third-party allotment to Sumitomo Mitsui Banking Corporation (hereafter, SMBC), a subsidiary of Sumitomo Mitsui Financial Group, Inc. (President and CEO: Yoshifumi Nishikawa; hereafter SMFG) and dispose of treasury stock as part of an agreement with SMFG to form a strategic alliance. Details of the resolution are as follows.

1.Issue of New Shares though a Third-Party Allotment

1) Main points of new stock issue

(1) Number of new shares to be issued: 8,900,000 of common shares

(2) Price of shares to be issued: 7,120 yen per share

(3) Total value of shares to be issued: 63,368,000,000 yen

(4) Amount of capitalization: 3,560 yen per share

(5) Application period: July 12, 2004 (Monday)

(6) Payment date: July 13, 2004 (Tuesday)

(7) Date from which dividends are calculated: April 1, 2004 (Thursday)

(8) Date of delivery of new stock certificates: None issued

(9) Party to which shares will be allotted and number of shares: Sumitomo Mitsui Banking Corporation; 8,900,000 shares

(10) Items related to agreement for continuing to hold new shares

Promise plans to ask SMFG and SMBC to hold these shares over the long term with a view toward strengthening the relationship among Promise and SMFG and SMBC.

(11) The previous items are based on the condition that notification submitted in accordance with the Securities and Exchange Law is effective.

Note: Method for determining the price of shares to be issued

This amount is calculated at 7,120 yen per share (with a discount rate of 1.955%) based on a per-share price of 7,262 yen, which was the average TSE closing price per share of Promise's common stock during the most-recent 30-day period (May 19-June 18, 2004) up to the last business day before the date of the resolution passed at the Board of Directors Meeting.

2) Movements in the total number of shares issued as a result of the capital increase (Capital movements)

3) Capital movements as a result of the capital increase

4) Reason for capital increase and uses of capital

(1) Reason for capital increase

To progress with a mutual sharing of profits with SMFG and strengthen affiliations with SMFG.

(2) Uses of procured capital through capital increase

Of the 63,112 million yen in estimated proceeds procured from the issue of new shares, Promise plans to allocate approximately 10.0 billion yen for the establishment of a joint venture and approximately 5.0 billion yen for the installation of loan processing machines. Promise plans to promptly consider the use of the remaining funds, including for such uses as capital investment and the carrying out of joint business.

(3) Expected impact on business results

For the above-mentioned reasons, Promise believes the capital increase will enable the Company to strengthen its financial stability, product development capabilities and brand power, and thus contribute to an improvement in its corporate earnings capabilities. There is no revision to the earnings forecast announced on April 27, 2004.

5) Distribution of profits to shareholders and other matters

(1) Basic policy on distribution of profits

While maintaining sufficient internal reserves necessary for carrying out future business and strengthening its management structure, Promise works to provide stable and continuous distribution of profits as well as to increase these distributions.

(2) Rationale for determining distributions

In accordance with the above-mentioned policies, Promise determines distributions based on comprehensive considerations that include financial condition, profit or loss in the fiscal period and payout ratio.

3) Use of internally retained funds

To contribute to earnings capabilities and corporate value, and thereby raise shareholders' value, Promise strives to make effective use of internally retained funds as part of its strategies for bolstering various aspects of its operations that include product development, IT investments and nurturing of employees.

6) Equity finance carried out in the past three years

(1) Promise has not carried out any equity finance in the past three years.

(2) Stock price movements for the past three fiscal years as well as recent stock price movements

Note: The stock prices shown for fiscal 2005 are from April 1, 2004 to June 18, 2004.

7) Outline of party to which shares will be allotted

2. Disposition of Treasury Stock

1) Purpose of disposition

Regarding the strategic alliance agreed upon with SMFG, Promise will transfer treasury stock to SMBC with the aim of progressing with the mutual sharing of profits and the strengthening of mutual affiliations.

2) Details of disposition of treasury stock

1) Type of stock: Common stock

(2) Total number of shares: 4,330,000 shares

(3) Price of stock: 7,120 yen per share

(4) Number of shares of treasury stock after disposition: 543,450 shares

Note: Method for determining the price of treasury shares to be disposed

This amount is calculated at 7,120 yen per share (with a discount rate of 1.955%) based on a per-share price of 7,262 yen, which was the average TSE closing price per share of Promise's common stock during the most-recent 30-day period (May 19-June 18, 2004) up to the last business day before the date of the resolution passed at the Board of Directors Meeting.

3)Schedule for disposition (plan)

June 21, 2004: Resolution by the Board of Directors for disposition of treasury shares

July 13, 2004: Payment date

3. Regarding Business Alliance with SMFG (Reference)

1) Reason for business alliance

While striving to ascertain in detail the evolving finance needs of customers, Promise and SMFG aim to address new customer needs through the development of attractive loan products, and the two companies will work to build a top position in Japan's consumer finance industry.

2) Details of business alliance

(1) Promise and SMBC, a subsidiary of SMFG, will jointly develop and promote schemes to provide new loan products that respond to needs for immediate borrowing across a wide range of customer segments, including those individuals who have yet to use loan products. Under these schemes, we will offer multiple loan products with different levels of interest rates. After receiving applications from customers and carrying out credit screening, we will promptly provide these products to customers. As we head for the realization of such schemes, Promise will engage in the handling of guarantees for loan products for SMBC and a consumer finance company to be established with joint investment from Promise and SMBC. We will also provide total support by offering know-how in such areas as sales promotions, credit provision management and loan collection.

(2) SMBC will establish a branch sales structure that includes setting up loan product counters while proceeding with the installation of loan processing machines developed by Promise in its branches.

(3) The Japan Net Bank Limited (hereafter JNB), a SMFG subsidiary, and Promise will carry out a comprehensive alliance that encompasses JNB's loan business.

(4) SMBC and Promise will engage in joint research with regard to the finance business, targeting the market for small corporations. 

(5) To promote deeper mutual understanding of each other's businesses, the SMFG Group and the Promise Group will implement wide-ranging personnel exchanges that span all levels within the two groups.

(6) Both companies plan to further expand and upgrade the scope of the business alliance through measures that will include collaborative activities between Promise and such SMFG Group companies as Sumitomo Mitsui Card Co., Ltd. and SAKURA CARD CO., Ltd.