October 27, 2023

Company name:

Okabe Co., Ltd.

Representative:

Hirohide Kawase, Representative Director,

President and Chief Executive Officer

(Securities Code: 5959, TSE Prime Market)

Contact:

Yasushi Hosomichi, Director and

Senior Managing Executive Officer

in charge of Administrative Division and

International Division

(TEL. +81-3-3624-5119)

Notice of Filing for Chapter 11 by our US Subsidiaries

Okabe Co., Ltd. ("we" or the "Company") announces that our subsidiaries Water Gremlin Company ("WG" hereinafter) and its holding company Water Gremlin Holdings, Inc. ("Holdings" hereinafter) resolved on October 26, 2023 (local time) to file for Chapter 11 bankruptcy under the United States Bankruptcy Code and filed for Chapter 11 bankruptcy on October 27, 2023 (local time) with the United States Bankruptcy Court for the District of Delaware.

Please note that WG and Holdings have agreed on the terms of DIP financing with a financial institution. Further, WG and Holdings are in discussions with a potential purchaser regarding the sale of their businesses. WG and Holdings are scheduled to sell their businesses to a purchaser after completing a bidding process and obtaining court approval. Therefore, the business operations of WG, such as production and sales, will continue as before.

1. Reason for Filing

As we announced on July 28, 2023, in consideration of the fact that the profitability of the battery terminal

business in the United States has severely deteriorated, we have identified the battery terminal business in the United States as an unprofitable business from a business portfolio perspective and have been developing and implementing significant measures regarding this business. Further, as we announced on June 22, 2023, residents near WG's factory in Minnesota initiated litigation against WG and Holdings alleging that they have incurred damages caused by emissions by WG of the harmful air pollutant (HAP) trichloroethylene (TCE) exceeding environmental standards. Such litigation may ultimately result in WG and Holdings incurring substantial liability. The boards of directors of WG and Holdings determined to file for Chapter 11 bankruptcy after considering how to restructure their businesses, as well as their estimated cash flow, maintenance of their business value and other potential future scenarios.

2. Total Debts of WG and Holdings

WG: 36,603 thousand USD (as of June 30, 2023)

Holdings: 6 thousand USD (as of June 30, 2023)

  • 1 -

3. Future Outlook

WG and Holdings are scheduled to restructure their businesses under the United States Bankruptcy Code

through the Chapter 11 process. WG and Holdings have agreed on the terms of DIP financing with a financial institution. Further, WG and Holdings are in discussions with a potential purchaser regarding the sale of their business. Therefore, the business operations of WG, such as production and sales, will continue as before.

Please note that we do not intend to make additional investments in WG and Holdings by being a sponsor during the process of their restructuring.

4. Effect on our Business Results

WG and Holdings are in discussions with a potential purchaser regarding the sale of their businesses. WG and Holdings are scheduled to sell their businesses to a purchaser after completing a bidding process and obtaining court approval. However it is not possible at this stage to estimate the effect of this matter on the Company, as this will largely depend on the sale price to be determined in the bidding process and the details of the reorganization plan to be finalized in the course of the Chapter 11 bankruptcy proceedings. As necessary, we will promptly make future announcements regarding the effect of this matter on the Company after carefully reviewing the progress of the Chapter 11 process.

5. Summary of WG and Holdings

  1. WG

1)

Company Name

Water Gremlin Company

2)

Headquarters

White Bear Township, Minnesota, United States

3)

Name

of

Bradley Hartsell (President and Director)

Representative

4)

Business Outline

Manufacture and Sales of Automobile Battery Terminals

5)

Stated Capital

18,796,000USD

6)

Date

of

November 10, 1949

Establishment

Capital

Wholly owned by Holdings, which is wholly owned by the

Relationship

Company

One of the Company's directors concurrently serves as a

Personnel

chairman and director of WG and one of the Company's

executive officers also concurrently serves as a director of

Relationship

WG. Further, one of the Company's employees is

7)

Relationship with

seconded to WG and serves as a director of WG.

the Company

Business

Not applicable

Relationship

Debt and

The Company provides a financial guarantee for WG.

Liabilities

Applicability of

WG is an affiliated party since WG is a consolidated

Affiliated Party

subsidiary of the Company.

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  1. Holdings

1)

Company Name

Water Gremlin Holdings, Inc.

2)

Headquarters

Grayslake, Illinois, United States

3)

Name

of

Yasushi Hosomichi (President and Director)

Representative

4)

Business Outline

Holding Company of WG

5)

Stated Capital

51,200,000USD

6)

Date

of

May 20, 2004

Establishment

Capital

Wholly owned by the Company

Relationship

One of the Company's directors concurrently serves as a

president and director of Holdings and two of the

Personnel

Company's executive officers also concurrently serve as

Relationship

directors of Holdings. Further, one of the Company's

7)

Relationship with

employees is seconded to Holdings and serves as a director

the Company

of Holdings.

Business

Not applicable

Relationship

Debt and

Not applicable

Liabilities

Applicability of

Holdings is an affiliated party since Holdings is a

Affiliated Party

consolidated subsidiary of the Company.

  1. Operating performance and financial condition of WG and Holdings over the past three years

a)

WG

(unit: thousands USD)

FY2020

FY2021

FY2022

Net Assets

47,563

44,535

32,584

Total Assets

85,063

76,317

66,912

Net Sales

43,427

50,858

46,801

Operating Loss (△)

△12,321

△3,474

△5,771

Net Loss (△)

△7,485

△3,027

△11,951

b)

Holdings

(unit: thousands USD)

FY2020

FY2021

FY2022

Net Assets

65,961

79,231

64,564

Total Assets

65,996

79,231

64,564

Net Sales

－

－

－

Operating Loss (△)

△36

△1

△106

Net Loss (△)

△35

△714

△10,843

end

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OKABE Co. Ltd. published this content on 01 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 November 2023 06:31:51 UTC.