Notification of Change in Status of MC Subsidiary (Exclusion of Specified Subsidiary)

MC announced today that it has resolved to pursue the early redemption of the Class A preferred shares issued by Chiyoda Corporation (Chiyoda), a consolidated subsidiary of MC, and currently held by MC.

MC has also resolved to suspend, until the end of June 2029, the conversion rights from Class A preferred shares to common shares as stipulated in Chiyoda’s current Articles of Incorporation.

These actions are subject to approval of the relevant amendments to Chiyoda’s Articles of Incorporation at the company’s 98th Annual General Meeting of Shareholders scheduled for June 2026.
Under International Financial Reporting Standards (IFRS), if all preferred shares held by MC were converted, MC’s voting rights in Chiyoda would amount to 82.1%, thereby qualifying Chiyoda as a consolidated subsidiary for accounting purposes.
Should the proposals be approved at the upcoming Annual General Meeting, Chiyoda will be reclassified as an equity-method affiliate and accordingly removed from MC’s scope of consolidation.
Furthermore, Chiyoda X-ONE Engineering Corporation, a subsidiary of Chiyoda, will also be excluded from MC’s list of subsidiaries, and Chiyoda International will be excluded from MC’s list of specified subsidiaries.

Date of Resolution for Amendment to Class A Preferred Share Terms：January 28, 2026
Effective Date of Amendment：Late June 2026（planned）

MC is expecting little impact on its FY2025 business performance due to this change.
The potential impact on FY2026 performance is currently under review.

MC announced that it has reached an agreement with Chiyoda to amend the redemption terms of the preferred shares held by MC. This amendment is part of a restructuring of the support framework that MC has provided to Chiyoda since 2019, aimed at accelerating the recovery of MC’s invested capital and strengthening Chiyoda’s independence.

In May 2019, MC committed a total of ¥160 billion, which included a ¥70 billion preferred share subscription and a ¥90 billion senior loan facility, to support Chiyoda’s business revitalization plan. Since then, MC has worked to strengthen its management base and risk management systems. As a result, no losses have been incurred from projects undertaken by Chiyoda during the support period, and MC’s involvement is viewed as having contributed to stabilizing Chiyoda’s financial and operational foundations.

In May 2025, Chiyoda announced a new medium-term management plan aimed at shifting its business model away from large overseas EPC projects, marking an important turning point in reducing earnings volatility—one of Chiyoda’s key structural challenges. Based on this progress, MC and Chiyoda engaged in discussions that led to the current agreement on revised redemption terms.

MC will also reassess its future holding policy for Chiyoda’s common shares (86,931,200 shares), taking into consideration industry trends, MC’s capital efficiency, and Chiyoda’s corporate value and independence.

The amendments will take effect upon approval of a partial amendment to Chiyoda’s Articles of Incorporation at the company’s Annual General Meeting scheduled for June 2026.

The principal redemption amount, which previously fluctuated with market value, will be fixed at ¥76.3 billion^*1.
Together with accumulated unpaid dividends of ¥10.5 billion as of FY2026 and future preferred dividends accruing at an annual rate of 3%, the total redemption amount is expected to be approximately ¥90 billion.
Redemption will be carried out between FY2026 and FY2028.
The senior loan facility, which was reduced to ¥10 billion in 2024, will be terminated upon execution of the amended preferred share terms.