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March 24, 2009

Promise Co., Ltd.

Sale of Subsidiaries and Consumer Loans Receivable, and Reorganization of Branches

    The Board of Directors of Promise Co., Ltd. approved a resolution on March 24, 2009 for the sale to NEOLINE CAPITAL Co., Ltd. of all shares of wholly owned consolidated subsidiaries Tamport Co., Ltd. and Sun Life Co., Ltd., the sale of the entire 66.5% equity stake in Cecile Credit Service Co., Ltd., a non-consolidated subsidiary, held by wholly owned subsidiary PAL Life Co., Ltd., and the sale of part of the consumer loans receivable held by Promise.
    In addition to these actions, Promise will reorganize its branch office network, primarily by converting some staffed branches to unstaffed branches. Furthermore, employees will be reassigned to improve employee efficiency in the consumer finance business and achieve the optimum use of human resources across the entire Promise Group.
    Currently, the Promise Group is restructuring the consumer finance business in response to the upcoming full enactment of Japan’s Money Lending Business Law (amended Money Lending Business Control and Regulation Law). The above actions are elements of this restructuring program, which is focused primarily on using expenses more productively and improving our loan portfolio.
1. Sale of subsidiaries and consumer loans receivable
1) Reason for the sale
    Both Tamport and Sun Life sold almost all of their consumer loans receivable to either Promise or PAL Servicer Co., Ltd., a loan servicing subsidiary, depending on the status of these loans. Since completing these sales in November 2007, these two companies terminated their loan operations and have been working on collecting the remaining loans.
    Cecile Credit is engaged in the consumer finance business, which involves the provision of financing to the customers of Cecile Co., Ltd., a large catalog sales company, and the factoring business for receivables of the suppliers of Cecile.
    The operating environment in the consumer finance business is extremely difficult as amendments to laws governing the industry cause the market to shrink and the volume of interest repayment claims remains high. Due to these challenges, Promise reached the decision that it must move swiftly to restructure its consumer finance business in preparation for the full enactment of the Money Lending Business Law. As a result, Promise has decided to sell these three subsidiaries and consumer loans receivable that were purchased in 2007 from Tamport and Sun Life to NEOLINE CAPITAL.
    The sale price reflects a provision in the contract signed with NEOLINE CAPITAL under which this company's group will be generally liable for future interest repayment claims associated with the loans of the three subsidiaries that Promise is selling.

2) Outline of subsidiaries to be sold                        (As of December 31, 2008)
1. Trade name
Tamport Co., Ltd.
Sun Life Co., Ltd.
Cecile Credit Service Co., Ltd.
2. Representative
Toshifumi Sugiki, President and Representative Director
Toshifumi Sugiki, President and Representative Director
Mitsuhiro Tateno, Representative Director
3. Location
3F, Osaka-ekimae Daini Building, 1-2-2-300, Umeda, Kita-ku, Osaka-city, Osaka
2-7-6 Kawaramachi, Takamatsu City, Kagawa
545-3 Kanko-cho, Takamatsu City, Kagawa
4. Date of establishment
July 18, 1975
January 8, 1975
March 8, 2004
5. Principal business
Collections of consumer loans under management (Consumer loan business was terminated in December 2007)
Collections of consumer loans under management
(Consumer loan business was terminated in November 2007)
Consumer finance and factoring
6. Fiscal term
7. Number of employees1
8. Paid-in capital
5,434 million yen
185 million yen
10 million yen
9. Total shares issued and outstanding
10. Principal shareholders (% of ownership)
Promise Co., Ltd.:    100% 2
Promise Co., Ltd.:    100%
PAL Life Co., Ltd. 3:   66.5%
Cecile Co., Ltd.:         19.5%
APFH2 Co., Ltd.:        14.0%
11. Performance in recent fiscal years                                    (Millions of Yen)
Operating income
Recurring loss
Net loss
Total assets
Notes:   1. Includes contracted employees and advisors.
            2. Tamport owns 303,399 shares out of the total shares issued.
            3. PAL Life is a wholly owned subsidiary of Promise.
3) Summary of consumer loans receivable to be sold
In early April 2009, Promise plans to sell consumer loans receivable that were purchased in 2007 from Tamport and Sun Life. Based on current estimates, Promise expects that these loans will amount to approximately 20.7 billion yen at the time of sale and will be sold for approximately 9.4 billion yen.
4) Purchaser of stock
1. Trade name
2. Representative
Nobuyoshi Fujisawa
3. Location
13F, ARK YAGI HILLS, Roppongi 1-8-7, Minato-ku, Tokyo
4. Principal business
Loan financing for individuals, Credit guarantee, Credit collection and Other

5) Number of shares sold, sale price, change in shares held before and after sale
Sun Life
Cecile Credit
1. Shareholdings before the sale (% of ownership)
133 shares (PAL Life)
2.Number of shares sold
3. Shareholdings after the sale(% of ownership)
4. Sale price
1 yen
1 yen
1 yen
6) Schedule of sale
1. Board of Directors resolution
March 24, 2009
2. Contract signing for sale of stock
March 27, 2009 (Planned)
3. Sale of stock
March 31, 2009 (Planned)
7) Impact on consolidated performance
    Promise expects to post a non-consolidated loss (extraordinary loss) of approximately 8.7 billion yen on the sale of stock in subsidiaries due to the sale of the stock of the three subsidiaries. Promise has not yet determined the amount of the consolidated loss on the sale of stock in subsidiaries. In addition, Promise expects to record a non-consolidated and consolidated loss of approximately 11.3 billion yen on the sale of consumer loans receivable. Promise plans to record this as an extraordinary loss for an addition to the allowance for credit losses in the current fiscal year because the sale of these loans is scheduled to take place in early April 2009.
    Furthermore, Promise expects to post a reversal of the allowance for credit losses in association with this sale of consumer loans receivable. Promise will finalize these figures based on its performance in March 2009 and will make a prompt announcement if a revision to the forecast for the current fiscal year is required.
    Promise foresees an annual saving in personnel expenses of approximately 1.9 billion yen  beginning in the fiscal year that starts in April 2009.
    NEOLINE CAPITAL has agreed to retain all employees of the three subsidiaries that it is purchasing from Promise following this acquisition. Along with the realignment of Promise branches described below, the sale of these subsidiaries will allow Promise to use its employees more productively. This will greatly improve workforce efficiency for the entire Promise Group while protecting the jobs of the employees of the three subsidiaries to be sold.
2. Reorganization of branches
1) Purpose
Promise will achieve the optimum use of human resources across the entire Promise Group along with a large reduction of staffed branches. This is one element of Promise’s restructuring program for its consumer finance business.
2) Detail of reorganization
Promise currently has 306 staffed branches and plans to reduce this to 148 branches by the end of April 2009. Promise plans to convert these branches into unstaffed branches so that customers can continue using Promise services at these locations.

Number of branches
As of Feb. 2009
End of Apr. 2009 (Planned)
Staffed branches
Unstaffed branches
3) Optimum use of human resources
Almost all of the 387 employees of the subsidiaries to be sold are currently assigned to jobs at Promise in loan management departments and contact centers and at a loan servicing subsidiary. Employees at branches to be closed will be reassigned to fill the positions that will become open when the subsidiaries are sold, facilitating the optimum use of human resources.
4) Cost of reorganization and impact on expenses
Promise estimates that the realignment of branches will result in expenses of approximately 0.4 billion yen for the disposal of equipment. Promise also expects this realignment to reduce annual branch operating expenses by 0.4 billion yen.
This news release has been translated from the original Japanese document released on March 24, 2009, for reference only.
In the event of any discrepancy between this translated document and the original Japanese document, the original document shall prevail.

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