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April 25, 2014

MOL issued Euro USD Zero Coupon Convertible Bonds due 2018 and 2020

Mitsui O.S.K. Lines, Ltd. (the "Company") has resolved at the meeting of the Board of Directors held on April 8, 2014 to issue, and had issued on April 24, 2014 the U.S.$300,000,000 Zero Coupon Convertible Bonds due 2018 (the “2018 Bonds") and the U.S.$200,000,000 Zero Coupon Convertible Bonds due 2020 (the "2020 Bonds") (each being bonds with stock acquisition rights, tenkanshasaigata shinkabu yoyakuken-tsuki shasai).

Background and Objective

In March 2014, the Company announced the "STEER FOR 2020", the three year mid-term management plan. In the plan, the Company sets out to transform its management policy into solid and quality growth. The company, as one of the growth strategies with its core competences, will focus on the businesses which are expected to generate a robust and stable profit such as liquefied natural gas ("LNG") carriers and offshore business. The proceeds of the Bonds will be used for the group's investments in vessels, including LNG carriers, to be built or delivered, and investments in the group's offshore business.

Reasons for choosing the Bonds

The Company has chosen to issue the Bonds because it believed that the issuance of the Bonds was most suitable for the financial objectives of the Company.

The Bonds have the characteristics as follows.

  • The Bonds are expected to contribute to mitigate the foreign exchange risk of the Company which has a large number of U.S. Dollar-denominated assets and revenues through asset liability management.
  • The Bonds is issued zero coupon despite being U.S. Dollar-denominated and, long term liability.
  • The Bonds have a conversion price which is above the closing price (the "Closing Price") of the company shares (the "Share") reported by the Tokyo Stock Exchange, Inc. on the pricing date and it is expected to mitigate the dilution of the earnings per share.

Terms of Issuance

  the 2018 Bonds the 2020 Bonds
(1) Aggregate principal amount of the Bonds U.S.$ 300 million U.S.$ 200 million
(2) Date of payment and date of issuance April 24, 2014
(3) Maturity date April 24, 2018 April 24, 2020
(4) Conversion Price* U.S.$ 5.34 per Share U.S.$ 4.80 per Share
(References)
Share price information on the pricing date (April 8, 2014)
a.Closing Price of the Shares 398 yen (U.S.$ 3.87)
(Exchange Rate is U.S.$ 1 = 102.93 yen)
b.Conversion premium
  {(Conversion Price*)/
  (Closing Price) - 1}×100
38.10% 24.14%

*"Conversion Price" is the amount to be paid per Share upon exercise of the stock acquisition right incorporated in the Bonds.

(5) Remarks Contingent-Conversion (130% of Conversion Price)
Net Share Settlement feature.

This announcement shall not constitute an offer to sell or a solicitation of an offer to buy the Bonds or Shares, nor shall there be any sale of these Bonds or Shares in any state of jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under securities law of any such state or jurisdiction.

This document does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or elsewhere. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"). They may not be offered or sold in the United States or to, or for the benefit of, U.S. persons (as defined in Regulation S under the Securities Act) absent registration or an exemption from the registration requirements of the Securities Act. No public offering of the securities will take place in the United States.

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