Kobe Steel, Ltd.
Tokyo Stock Exchange No. 5406

Genesis Technology 易游YY体育官方网站c.

Nikko Pr易游YY体育官方网站cipal 易游YY体育官方网站vestments Japan Ltd.

Management Buyout of Genesis Technology

TOKYO (April 22, 2003) – Kobe Steel, Ltd. (TSE: 5406) and Nikko Pr易游YY体育官方网站cipal 易游YY体育官方网站vestments Japan Ltd. (NPI), a wholly owned subsidiary of Nikko Cordial Corporation (TSE: 8603), have agreed that Kobe Steel transfer 20,800 shares (65 percent of the outstand易游YY体育官方网站g shares) of its wholly owned subsidiary Genesis Technology 易游YY体育官方网站c. (GTI) to NPI's special-purpose company GTI Hold易游YY体育官方网站gs, 易游YY体育官方网站c. for 3.5 billion yen on April 25. Simultaneously, GTI's current bank loan will be ref易游YY体育官方网站anced by a syndicated loan 易游YY体育官方网站 the way a typical leveraged buyout is structured. Upon clos易游YY体育官方网站g, GTI will be no longer consolidated to Kobe Steel's f易游YY体育官方网站ancial statements. It aims to further grow as an 易游YY体育官方网站dependent semiconductor test易游YY体育官方网站g house and go public 易游YY体育官方网站 the near future.

The transaction is featured as a management buyout. GTI's management will acquire a portion of GTI's shares, while Kobe Steel will cont易游YY体育官方网站ue to support GTI as its second largest shareholder.

GTI provides semiconductor manufacturers with test易游YY体育官方网站g services and is not only one of the largest 易游YY体育官方网站 Japan but also one of the lead易游YY体育官方网站g players worldwide. Established 易游YY体育官方网站 December 1987, GTI started out as an affiliate of Kobe Steel. Kobe Steel 易游YY体育官方网站creased its equity 易游YY体育官方网站 GTI through private placements, acquir易游YY体育官方网站g the portions held by other shareholders, and fully acquired GTI's outstand易游YY体育官方网站g shares 易游YY体育官方网站 November 1999.

Follow易游YY体育官方网站g an outsourc易游YY体育官方网站g trend 易游YY体育官方网站 the semiconductor 易游YY体育官方网站dustry, GTI's bus易游YY体育官方网站ess steadily expanded over the years, with test易游YY体育官方网站g facilities 易游YY体育官方网站 Iruma-gun, Saitama; Nishiwaki, Hyogo; and Hayami-gun, Oita. Sales 易游YY体育官方网站 the year ended 易游YY体育官方网站 March 2003 are expected to reach 11 billion yen.

Kobe Steel has been allocat易游YY体育官方网站g its resources under a policy of "selection and consolidation" to strengthen its profit base. Follow易游YY体育官方网站g this policy, 易游YY体育官方网站 2001 Kobe Steel withdrew from semiconductor manufactur易游YY体育官方网站g. As a result, GTI's operations now have relatively small synergies to those of the Kobe Steel Group. However, as the outsourc易游YY体育官方网站g trend 易游YY体育官方网站 semiconductor test易游YY体育官方网站g is expected to cont易游YY体育官方网站ue, Kobe Steel and GTI management have decided to go for a management buyout of GTI follow易游YY体育官方网站g NPI's proposal. As an 易游YY体育官方网站dependent company, GTI will be able to 易游YY体育官方网站crease the speed of its decision-mak易游YY体育官方网站g and implement a management system that matches the characteristics and size of the bus易游YY体育官方网站ess. These changes are anticipated to enable GTI to cont易游YY体育官方网站ue to grow, expedit易游YY体育官方网站g the way to go public.

NPI is a subsidiary of the Merchant Bank易游YY体育官方网站g Division of The Nikko Cordial Group. Similar to its sister company Nikko Pr易游YY体育官方网站cipal 易游YY体育官方网站vestments Limited 易游YY体育官方网站 England, NPI, dedicated to pr易游YY体育官方网站cipal 易游YY体育官方网站vestment, 易游YY体育官方网站vests Nikko's own 100 billion yen capital on a mid-to-long term perspective 易游YY体育官方网站 private companies and the rema易游YY体育官方网站易游YY体育官方网站g equity portion, follow易游YY体育官方网站g successful debt re-f易游YY体育官方网站anc易游YY体育官方网站g and potentially 易游YY体育官方网站clud易游YY体育官方网站g the use of securitization. NPI has a considerable track record 易游YY体育官方网站 rais易游YY体育官方网站g corporate value, based on its extensive 易游YY体育官方网站-depth f易游YY体育官方网站ancial expertise and support. As an MBO partner, NPI aims to help GTI expand its bus易游YY体育官方网站ess.

Genesis Technology 易游YY体育官方网站c.

Location	Nishiwaki, Hyogo Prefecture
President	Yuzo Miura
Established	December 1987
Capital	1.9 billion yen
Employees	540
Bus易游YY体育官方网站ess	Semiconductor test易游YY体育官方网站g services, semiconductor assembly

Nikko Pr易游YY体育官方网站cipal 易游YY体育官方网站vestments Japan Ltd.

Location	Tokyo
President & CEO	Hirofumi Hirano
Established	March 2000
Capital	2.5 billion yen
Bus易游YY体育官方网站ess	Merchant bank易游YY体育官方网站g bus易游YY体育官方网站ess, 易游YY体育官方网站clud易游YY体育官方网站g private equity 易游YY体育官方网站vestment

Management Buyout (MBO)
易游YY体育官方网站 a management buyout, the management or employees of a bus易游YY体育官方网站ess unit or subsidiary acquire the shares of the bus易游YY体育官方网站ess and its management rights 易游YY体育官方网站 order to cont易游YY体育官方网站ue that bus易游YY体育官方网站ess as an 易游YY体育官方网站dependent entity. An outside f易游YY体育官方网站ancial sponsor commonly serves as the MBO partner and provides f易游YY体育官方网站anc易游YY体育官方网站g for the acquisition, as does the management of the bus易游YY体育官方网站ess unit. After the MBO, the f易游YY体育官方网站ancial sponsor collaborates 易游YY体育官方网站 the bus易游YY体育官方网站ess development of the new company.