ANNUAL REPORT

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Excluding Metaldyne, Asahi Tec’s effective interest rates on its consolidated borrowings under its senior and subordinated credit facilities at March 31, 2008 were 2.75% and 4.66% respectively. Asahi Tec is likely to breach certain financial covenants under its credit agreements in the course of the fiscal year ending March 31, 2010. Asahi Tec is currently seeking a waiver of covenants from its lenders. In the event that Asahi Tec were not successful in obtaining such a waiver, it would be in default of its obligations under its credit agreements, which would cast significant doubt on Asahi Tec’s ability to operate as a going concern. 25.1.3. HIT At March 31, 2009, HIT had outstanding indebtedness of EUR 546.1 million (JPY 71,631 million) compared to EUR 467.5 million (JPY 73,576 million) at March 31, 2008. The credit facilities at March 31, 2009, included EUR 317.5 million senior and EUR 99.5 million mezzanine facilities, EUR 33.4 million revolving facility and a EUR 90.8 million PIK (Payable in Kind) facility. On December 29, 2008, HIT reached several agreements in view of the liquidity shortfall that resulted from collapsing demand. HIT’s lenders agreed to a standstill, originally until March 31, 2009, but extended twice. Furthermore, certain of HIT’s main customers and a key supplier provided for additional liquidity of EUR 30 million and compensation for reduced volumes. Finally, RHJI provided secured financing up to EUR 20 million, in the form of factoring -and sale and lease back arrangements. During the standstill, the Company and a committee of HIT’s senior lenders agreed to a capital restructuring proposal that was approved by HIT’s lenders on May 25, 2009 and closed in July 2009. As part of the restructuring, the Company invested EUR 50 million in exchange for a controlling 51% stake in Honsel. The remaining 49% of the group is held by Honsel’s former senior term lenders following a debt-for-equity swap, which resulted in HIT’s total outstanding secured term debt of approximately EUR 507.8 million being reduced to EUR 140 million, consisting of EUR 110 million senior term loan and EUR 30 million mezzanine term loan, all of which are held by Honsel’s former senior term lenders. Honsel’s existing EUR 40 million revolving credit facility, as well as EUR 50 million of financing from the Company and certain of Honsel’s key customers and suppliers, remained in place. The interest rates on Honsel’s new senior term are determined as Euribor plus 5%. According to the terms of the new senior credit, Honsel must ensure that, during a period of three years after the closing date, it has hedging arrangements in place to cause at least 66 and 2/3% of the outstanding amounts under the senior debt and the Customer Financing to bear interest at a fixed or capped rate. The new mezzanine facility will pay Euribor + 5% cash interest and 5% PIK interest. Honsel may at any time during the life of the Mezzanine Facility elect to have all interest capitalized at the end of each interest period, provided that, following the exercise of such election by the Company, interest shall accrue at a fixed rate of 16.00% PIK per annum. 25.1.4. Niles At March 31, 2009, Niles had JPY 28,326 million of indebtedness outstanding on a consolidated basis, compared to JPY 27,741 million a year earlier. The credit facilities included senior term loans (JPY 10,455 million), revolving loans (JPY 7,997 million), an unsecured bullet loan (JPY 2,167 million), finance leases (JPY 2,245 million), a bullet loan secured by a cash deposit from RHJI (JPY 2,500 million) and non-bank debt from a major stakeholder (JPY 2,500 million). On May 20, 2009, Niles bolstered its capital structure through a total capital injection of JPY 6,000 million of which JPY 3,500 million was provided by the Company and JPY 2,500 million by the major stakeholder that had provided financing of JPY 2,500 million previously. Part of the proceeds was used to repay JPY 2,500 million of short-term debt that was secured by a cash deposit from RHJI, and the major stakeholder’s loan of JPY 2,500 million. Furthermore, syndicate lenders agreed on a refinancing of the existing debt structure, of which JPY 7,566 million was outstanding at March 31, 2009, with new bullet loans maturing in June 2011. At March 31, 2009, the effective interest rate on Niles' senior credit facilities amounted to 3.03%. 25.1.5. Phoenix Seagaia Resort On September 29, 2008, Phoenix Seagaia Resort entered into an agreement with its lenders to amend certain terms and conditions of its existing credit facility of JPY 7,508 million. The term of the amended loan is 3 years. The amendment provides for quarterly repayments of JPY 195 million and a bullet payment of JPY 5,497 million on September 30, 2011. In addition to this amended loan agreement, the Company extended the revolving credit facility from JPY 500 million to JPY 1,000 million until September 30, 2011. The outstanding balance of this intragroup loan at March 31, 2009 amounted to JPY 400 million. The Company guarantees the quarterly repayments and the total interest up to an aggregate amount of JPY 3,400 million. The interest rate is based on the three month Libor plus a margin ranging from 260 to 410 basis points, depending on the level of reported EBITDA. At March 31, 2009, Phoenix Seagaia Resort had already repaid JPY 390 million of the guaranteed principal, and had outstanding financial indebtedness of JPY 7,144 million, compared to JPY 7,777 at March 31, 2008. The effective interest rate on Phoenix Seagaia Resort's credit facility was 5.04% at March 31, 2009. 78
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2009 25.2. Finance lease liabilities Finance leases are payable as follows: (in JPY millions) 2009 2008 Note Minimum lease payments Under the terms of the lease agreements, no contingent rents are payable. Interest Principal Minimum lease payments Interest Principal Less than one year 2,340 89 2,251 2,249 131 2,118 Between one and five years 2,662 87 2,575 3,206 123 3,083 More than five years 92 2 90 213 4 209 Total 30 5,094 178 4,916 5,668 258 5,410 25.3. Other loans and borrowings Other loans and borrowings are payable as follows: (in JPY millions) 2009 2008 Non-bank debt is broken down as follows : Non-bank debts Others Total Non-bank debts Less than one year 2,798 5,053 7,851 282 904 1,186 Between one and five years 2,691 1,486 4,177 120 (1,423) (1,303) More than five years 11,143 - 11,143 10,517 (590) 9,927 Total 16,632 6,539 23,171 10,919 (1,109) 9,810 (in JPY millions) 2009 2008 Loans from customers 11,038 - Preferred shares 5,203 10,487 Others 391 432 Total 16,632 10,919 Others Total 25.4. Collateralized assets Various credit facilities are secured by asset collateral. The carrying value as at March 31, 2009 and 2008 of collateralized assets is as follows: (in JPY millions) 2009 2008 Non-current Current Total Non-current Current Total Asahi Tec 43,260 23,503 66,763 79,149 36,597 115,746 CME - - - - 45 45 HIT 56,340 11,886 68,226 51,806 30,674 82,480 Niles 10,220 3,224 13,444 10,615 5,479 16,094 Phoenix Seagaia Resort 10,349 226 10,575 10,764 291 11,055 Total 120,169 38,839 159,008 152,334 73,086 225,420 The decrease of assets that have been collateralized mainly resulted from the foreign exchange impact of JPY 12,838 million and the debt extinguishment at Metaldyne of JPY 38,966 million. 79
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ANNUAL REPORT Year Ended March 31,
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PART I LETTER TO SHAREHOLDERS AND B
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Support to our portfolio companies
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The evolution of the book value of
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Consolidated Financial Statements F
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Asahi Tec Corporation • Headquart
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RHJI's purchase agreement to buy ce
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Honsel International Technologies S
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Niles Co., Ltd. • Headquarters: J
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Columbia Music Entertainment, Inc.
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Phoenix Resort K.K. • Headquarter
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Shaklee Global Group, Inc. • Indu
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Co-ordination and Production : IPAC
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ANNUAL REPORT

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