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June 28, 2019

MOL to Issue Sustainability Bonds
- Issue to Includes Japan's 1st Sustainability Bonds Aimed at Individual Investors, 'MOL Blue Ocean Sustainability Bonds' -

TOKYO-Mitsui O.S.K. Lines, Ltd. (MOL; President & CEO: Junichiro Ikeda) today announced a plan to issue 'Sustainability Bonds' (its 22nd, 23rd, and 24th series of unsecured corporate bonds) through a public offering in Japan's domestic market in July of this year. It also announced the acquisition of a preliminary evaluation (Note 1) from a third-party institute.
Sustainability bonds are used to both finance and refinance green projects, which protect and improve the environment, and social projects, which help address social issues. In the management plan "Rolling Plan 2019," MOL's goals include "develop environment and emission-free businesses into core businesses," which continues from "Rolling Plan 2018," and "promote initiatives for United Nation's Sustainable Development Goals (SDGs)." In addition, the "MOL Group Environmental Vision 2030," established in April 2017, clarifies the group's vision on addressing environmental issues. The MOL Group also views responses to stricter environmental regulations and activities to reduce its environmental impact as opportunities to create new businesses and diversify its business portfolio, while addressing new challenges in technical innovation. To foster a deeper understanding of the MOL Group's proactive initiatives on the environment among a wide range of stakeholders, the bonds are targeted to both institutional and individual investors. This is the first time a company in Japan has issued sustainability bonds aimed at individual investors.

[ Outline of Sustainability Bonds ]

Serial number of bonds (Retail bonds; second line is nickname) 22nd series
unsecured
corporate bonds
23rd series
unsecured
corporate bonds
24th series
unsecured
corporate bonds
(retail bonds)
MOL Blue Ocean
Sustainability Bonds
Maturity of issues 4 years 6 years 6 years
Issued amount ¥5.0 billion ¥5.0 billion ¥10.0 billion
Issue period Scheduled for issue in July 2019
Use of funds Allocation to MOL's green and social projects:
(1) Establishment of maritime academy in the Philippines, (2) Promotion of workstyle reforms, (3) Ballast water treatment system, (4) Sulfur Oxide (SOx) scrubber, (5) LNG-fueled vessels, (6) LNG fuel bunkering vessel, (7) New type of PBCF, (8) Wind Challenger Plan
Lead management companies Daiwa Securities Co., Ltd.,
SMBC Nikko Securities Inc.
Daiwa Securities Co., Ltd.,
Mizuho Securities Co., Ltd.
Sustainability Bond Structuring Agent
(Note 2)
Daiwa Securities Co., Ltd.

(Note 1)
Effective June 28, 2019, MOL acquired an "SU1" credit rating, the highest possible, in a preliminary sustainability finance evaluation from the Japan Credit Rating Agency, Ltd. (JCR) to secure eligibility and transparency of the sustainability bonds and increase their appeal to investors. Please refer to the following links for details of the preliminary evaluation:

(Note 2)
The party that supports the issue of sustainability bonds through establishment of bond frameworks and advice on acquisition of evaluations, such as second opinions by external third parties.

[ Main use of funds ]

(1)Establishment of maritime academy in the Philippines
As the compilation of MOL Group's initiatives on safe operation, in August 2018, MOL jointly opened MOL Magsaysay Maritime Academy Inc. (four-year course, maximum 300 students per year) in the Philippines with a local partner. The facility is complete and in operation, providing training that allows students to start work immediately, thanks to a layout of practice facilities that closely replicates the actual vessels the students will serve aboard. MOL recruits and trains high competent seafarers through the operation of the academy, with the aim of "becoming the world leader in safe operation."

(2)Promotion of workstyle reforms
The objectives of the "Workplace Reforms Project" are "establishment of MOL's unique workplace" and "realization of diverse styles of work" at group companies in order to promote new, creative ideas and initiatives. The project aims to change employees' consciousness and approach to work itself by realizing workplace reforms in combination with new personnel systems and advanced information and communication technology (ICT) tools. Space on the fifth floor of MOL's Head Office building was remodeled as a pilot office to measure the effect of workplace reforms aimed at creating the workplace the company hopes to realize.

(3)Ballast water treatment system
Ballast water treatment systems protect marine biodiversity by reducing the transboundary movement of microbes and bacteria contained in ballast water, which is loaded to provide additional weight to stabilize the hull of a ship. MOL established a policy to equip its vessels with ballast water treatment systems in fiscal year 2014, ahead of the issuance of the Ballast Water Management Convention in September 2017. As of April 2019, 142 MOL Group-owned vessels are equipped with ballast water treatment systems.

(4)Sulfur Oxide (SOx) scrubber
This system reduces air pollution by removing sulfur oxides (SOx) from vessel engine exhaust. Scrubbers meet new International Maritime Organization (IMO) regulations related to the concentration of sulfur content in bunker oil.
* Drawing below is for illustration purposes only.

(5)LNG-fueled vessels
These vessels use liquefied natural gas (LNG) as fuel instead of conventional heavy fuel oil. Combustion of LNG virtually eliminates SOx emissions, compared to heavy fuel oil, and also results in lower emissions of nitrogen oxide (NOx) and carbon dioxide (CO2).


* The LNG-fueled tugboat delivered in February 2019.

(6)LNG fuel bunkering vessel
This type of vessel supplies LNG-fueled vessels. It will contribute to the wider use of LNG as a fuel for merchant vessels. In February 2018, MOL signed a long-term charter contract for the world's largest LNG bunkering vessel. It is slated to supply LNG fuel to LNG-fueled mega containerships in Northern Europe starting in 2020.
In February 2019, MOL and Singapore's state energy company signed a long-term charter contract for an LNG bunkering vessel.


* The vessel bunkering LNG fuel in a containership. (For illustration purpose only)

(7)New type of PBCF
The PBCF system reduces fuel consumption by improving the efficiency of ships' propellers, which in turn reduces exhaust emissions. It can boost fuel efficiency by around 5% compared to a similar vessel not equipped with a PBCF. The new type of PBCF was jointly developed by MOL, Akishima Laboratories (Mitsui Zosen) Inc., and MOL Techno-Trade, Ltd. MOL Techno-Trade has started sales of this upgraded version of the PBCF, which promises even greater energy-saving effects. Including both the previous and upgraded versions, 3,300 vessels all over the world have been equipped with the PBCF.

(8)Wind Challenger Plan
MOL participates in the Wind Challenger Plan, a joint industry-academia research project led by Tokyo University that was launched in 2009. The project focuses on using advanced sails to provide propulsion for merchant vessels. It aims to reduce vessels' fuel consumption and CO2 emissions by maximizing the use of wind power. The research and verification test phase was completed in September 2017, and the demonstration test and commercialization phase began in October of that year. MOL will select a vessel to equip with sails within fiscal 2019, aiming to start operation in 2022.


* CG images showing a close-up of the sail and the vessel underway with wind power

The press release is provided only for the purpose of announcing information related to the issue of Mitsui O.S.K. Lines' bonds, and does not constitute an offer to sell or the solicitation for investments or any other similar activities within or outside Japan.

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