Mitsui & Co., Ltd. ("Mitsui") announced
that it has decided on winding down its subsidiary Mitsui Oil (Asia) Pte. Ltd.
(MOAS, Headquarters: Singapore).
Recently Mitsui has been considering
various alternatives to restructure its physical and derivative trading businesses
in crude oil and petroleum products extended in Asia within its group companies,
which included a possible transferal of those operations from MOAS to other
entities. In the meantime, as Mitsui announced on November 21 and December 20,
2006, one of the traders at MOAS had incurred but deceptively concealed significant
unrealized losses on physical and future trading of naphtha, and accumulated
losses realized through orderly liquidation of these transactions amounted to
¥9.6 billion (before tax), bringing MOAS to negative net worth of ¥7.7 billion
as of December 31, 2006.
As MOAS has virtually completed its obligations
on outstanding physical contracts, Mitsui is now announcing on its decision
to wind down MOAS' operation and the related time schedule. Following this
decision, MOAS will substantially downsize its activities, and cease entering
into new purchase and sales contract, except for transactions required for the
liquidation of outstanding inventories. MOAS will honor and fulfill all of its
outstanding contractual obligations on swap agreements in compliance with their
terms and the relevant legal requirements in Singapore, and subsequently target
to complete the necessary board and shareholder resolution for the dissolution
and liquidation of the company by March 31, 2008. Mitsui is fully committed
to supporting MOAS in its execution of those outstanding contracts. Mitsui's
forecast net income for the year ending March 31, 2007 remains unchanged as
a result of this decision.
As announced on December 20, 2006, Mitsui
has conducted an internal investigation on this incident, which completed on
January 30, 2007. MOAS reported the findings of the internal investigation to
Singapore Police Force on February 12, 2007. Based on the recommendations made
as a result of Mitsui's internal investigation, Mitsui will implement relevant course of actions
to further reinforce the controls and procedures over Mitsui's group-wide commodity
This press release includes forward-looking
statements about Mitsui. These forward-looking statements are based on the current
assumptions and beliefs of Mitsui in light of the information currently available
to it, and involve known and unknown risks, uncertainties and other factors.
Such risks, uncertainties and other factors may cause Mitsui's actual results,
performance, achievements or financial position to be materially different from
any future results, performance, achievements or financial position expressed
or implied by these forward-looking statements. The risks, uncertainties and
other factors referred to above include, but are not limited to, those contained
in Mitsui's latest annual report on Form 20-F, which has been filed with the
U.S. Securities and Exchange Commission.
This press release is published
in order to publicly announce specific facts stated above, and does not constitute
a solicitation of investments or any similar act inside or outside of Japan,
regarding the shares, bonds or other securities issued by us.