Notice of Financing through a Subordinated Term Loan

Tokyo, Japan—DIC Corporation today announced that it will raise a total of ¥20 billion through a subordinated term loan (“the new subordinated loan”) and will also repay all of the principal of in full, on the first optional redemption date, the ¥60 billion subordinated loan (“the existing subordinated loan”), the drawdown date of which was September 30, 2021. These transactions are collectively referred to as the “refinancing.”

1. Purpose and significance of the subordinated loans
In fiscal year 2021, to procure funds for the acquisition of shares and assets of the Colors & Effects business of BASF GmbH of Germany, DIC selected a financing method that would avoid a decline in capital efficiency due to stock dilution while maintaining a sound financial position.
As a result, on September 30, 2021, the Company raised ¥60 billion through the existing subordinated loan.

With the existing subordinated loan soon to reach its first optional redemption date (September 30, 2026), DIC has decided to implement the refinancing by procuring a ¥20 billion new subordinated loan and repay the ¥60 billion existing subordinated loan.

As outlined in the Phase 2 portion of its long-term management plan, DIC Vision 2030, the Company views subordinated loans as an effective means of financing that enables it to both achieve improved capital efficiency and maintain financial soundness, which are key to enhancing corporate value.

2. Characteristics of the subordinated loan
A subordinated loan is a hybrid financing instrument with characteristics of both debt and equity. Accordingly, while classified as debt, it has characteristics similar to equity. As a result, the new subordinated loan is expected to be recognized by credit rating agencies as having equity credit attributes to a certain extent, enabling the Company to strengthen its financial base without causing stock dilution. Specifically, the Company expects that 50% of the total amount procured will be recognized as having equity credit by Japan Credit Rating Agency, Ltd.

* In the case of early repayment of the new subordinated loan, DIC anticipates procuring funds through the issuance of common stock or debt (“refinancing securities”) recognized by the credit rating agency as having equity credit equivalent to or greater than that of the subordinated loan. However, if the Company satisfies certain financial requirements when early repayment is made five years after the drawdown date or later, it may defer the procurement of funds through refinancing securities.

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About DIC Corporation
DIC Corporation is one of the world’s leading fine chemicals companies and the core of the DIC Group, a multinational organization comprising over 170 companies, including Sun Chemical Corporation, in more than 60 countries and territories. The DIC Group is recognized as a global leader in the markets for a variety of products essential to modern lifestyles, notably packaging materials, display materials such as those used in television and computer displays, and high-performance materials for smartphones and other digital devices, as well as for automobiles. Through such products, the Group endeavors to deliver safety and peace of mind, and color and comfort, to people everywhere. The DIC Group also seeks to contribute to a sustainable society by developing innovative products that respond to social change and which help address social imperatives. With annual consolidated net sales exceeding ¥1 trillion and approximately 21,000 employees worldwide, the Group pledges to continue working in close cooperation with its customers wherever they are. For more information, please visit the DIC global website: https://www.dic-global.com/en/