Statement by Oasis in Response to the “Hokuetsu Board of Directors’ Opinion on Oasis’ Presentation” (Securities Code: 3865 JT)

* Oasis publishes response to Hokuetsu statement and new details of whistleblower complaint from former Hokuetsu employee
* Mr. Kishimoto has lost the trust of his employees and is no longer qualified to lead Hokuetsu
* Oasis calls on shareholders to Vote Against the reappointment of Mr. Kishimoto as President and Representative Director at Hokuetsu’s AGM

HONG KONG--()--Oasis Management Company Ltd. (“Oasis”) is the manager to funds that beneficially own over 18% of Japanese paper manufacturer Hokuetsu Corporation (3865 JT) (“Hokuetsu” or the “Company”). Oasis has adopted the Japan FSA’s “Principles of Responsible Ownership” (a/k/a the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies.

Oasis has focused on improving Hokuetsu’s corporate value for several years, including by announcing its public “A Better Hokuetsu” campaign in October 2022 and recent “Hokuetsu Corp Gov” campaign announced on May 22, 2023. In response to the “Hokuetsu Corp Gov” campaign, Hokuetsu published a “Notice of the Board’s Opinion on Oasis’ Presentation” (the “Announcement”) on June 2, 2023.

In this announcement, Hokuetsu acknowledges that it does not hold the Daio shares for pure investment purposes, and admits that it needs to improve its relationship with Daio:

With regard to the shares of Daio, we continue to hold them from the perspective of the medium- to long-term business strategy of the Group, such as strengthening the alliance between Daio and the Company, accelerating the portfolio shift by developing new businesses, and strengthening the business foundation, which is quite different from the general "cross-shareholdings" as pointed out by Oasis. Therefore, we do not change our shareholding policy based on Daio's performance in a single fiscal year or its market value, which can fluctuate significantly in the short term.” (emphasis Oasis’s)

The Company claims that its Daio cross-shareholding is “quite different from the general “cross-shareholding”. However, the Announcement states that Hokuetsu owns the Daio shares “from the perspective of the medium- to long-term business strategy of the Group, such as strengthening the alliance between Daio and the Company,” and thus admits that the Company is not holding Daio shares for pure investment purposes. Hokuetsu’s significant shareholder disclosure for its Daio holding also explicitly states that its Daio shares are held for “cross-shareholding purposes”. Therefore, despite the Company’s vague statements to the contrary, it seems clear that the Daio shares held by Hokuetsu are in fact general cross-shareholdings. According to the definition published by the Tokyo Stock Exchange, "cross-shareholdings" include general listed shares held by listed companies for purposes other than pure investment.

In addition, the Announcement states:

Oasis has determined that the relationship between the Company and Daio is disconnected and that no business synergies can be expected between the Company and Daio, including in the future. However, the Company and Daio have exchanged opinions on how to improve the relationship between the two companies, including meetings between the top management of the two companies, and Oasis' perception differs from the facts."

Hokuetsu’s acknowledgment of trying to "improve the relationship" only shows that the relationship between Hokuetsu and Daio has deteriorated. While Hokuetsu may now say it is trying to improve this relationship, we think this is nowhere close to realizing synergies. In our most recent meeting with them, Hokuetsu management said they had asked Daio questions related to governance concerns, based on a book written by a former president of Daio, which states that he thought there were doubts about the process of placing orders with Daio Shipping when he was imprisoned, and that these doubts indicate governance problems at Daio. This one-sided pursuit of Daio by Hokuetsu management is proof that they are not seeking to improve their relationship with Daio, but rather, to continue to maintain a confrontational stance. If this is called an exchange of opinions aimed at improving the relationship, Oasis believes that repeated exchanges of opinions cannot be expected to lead to positive synergies, and that this is not a justification for holding Daio shares at all.

In the first place, the deterioration of the relationship between the two parties began with a lawsuit led by Mr. Kishimoto as representative director regarding Daio's issuance of convertible bonds in December 2015, and lasted a total of five years until Hokuetsu lost the lawsuit in December 2020. Hokuetsu has put itself in a situation where it cannot realize the true value of its most important asset, its Daio shares. Unless Mr. Kishimoto takes responsibility for causing the deterioration of the relationship, it is clear that there is no synergy in holding Daio stock, and no hope for any real "improvement" in the relationship with Daio.

The Announcement also states:

(1) The Company has achieved all of the targets of its "Mid-Term Management Plan 2023" and has also largely achieved the targets of its "Vision 2020."

The Company achieved the targets for sales and operating profit in FY2022 and achieved the 300 billion yen level in net sales for the first time since its establishment. The other consolidated management targets for FY2022 were missed mainly due to a one-time equity in losses of affiliates due to external factors, which are expected to recover from the next fiscal year onward, as mentioned above.”

However, there is a discrepancy between the text and the title. The title states that all the targets of the "Mid-term Management Plan 2023" have been achieved, but the text states that the consolidated management targets have not been achieved. In fact, the targets for ordinary income, net income, ROE, and EBITDA for FY2022 have not been achieved. We believe this misleading statement is inappropriate.

Beyond not meeting its targets, regarding Hokuetsu's entry into the household paper business, it was clear that the market is mature and that Hokuetsu has no competitive edge. There is in no way to justify the fact that Hokuetsu made a bad business decision in the first place.

Moreover, Hokuetsu's share price performance is also noted in the Announcement as being a high Total Shareholder Return (TSR). However, the high TSR is due to the increased paper pulp price and investors’ expectations of improved governance through Oasis’s engagement, and is not a credit to Hokuetsu's management team.

Anonymous whistleblower message from a former Hokuetsu employee

After the launch of Oasis’s "Hokuetsu Corp Gov" campaign on May 22, 2023, Oasis received several e-mails from stakeholders expressing a sincere desire to improve Hokuetsu’s governance. Among them, we received a message from a former Hokuetsu employee who wished to remain anonymous. The former employee’s message expresses concerns about the president’s personal interests and salary cuts for employees, and says he cannot see a future for the Company. The full text of this message is available at

The fact that Oasis received such a message from a whistleblower is itself proof that there is a problem with the current governance system at Hokuetsu, including its internal whistleblowing system. In addition, many current and former employees have posted comments on internet employment information websites and have voiced similar concerns as those voiced by this whistleblower, saying that many young people are leaving Hokuetsu, and that they do not see hope for the future of Hokuetsu. This is backed up by the fact that the average age of the Company's employees is increasing with each passing year.

We believe now is the time to put an end to the old system and give Hokuetsu employees hope for the future. Improving Hokuetsu's governance depends on the decisions of each and every shareholder. As a shareholder, we can no longer entrust the management of Hokuetsu to Mr. Kishimoto.

We call on all shareholders who care about improving Hokuetsu’s governance and corporate value to VOTE AGAINST the reappointment of Mr. Kishimoto as President and Representative Director at Hokuetsu’s AGM.

To learn more about Oasis’s proposals, please visit We welcome all stakeholders to contact Oasis at to help improve Hokuetsu’s Corp Gov through accountability now.


Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at Oasis has adopted the Japan FSA’s “Principles of Responsible Institutional Investors” (a/k/a Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with our investee companies.

The information contained in this press release (referred to as the "Document") is an information resource for shareholders in Hokuetsu offered by Oasis, the investment manager to funds that are shareholders of Hokuetsu (the "Oasis Funds"). The Document is not intended to solicit or seek shareholders' agreements to jointly exercise any voting rights with Oasis. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate share ownership with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Oasis does not intend to be subjected to such notification requirement. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.


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For all inquiries, please contact:
Taylor Hall