Hitachi Metals : Announcement of Issuance of Class Shares through Third-Party Allotment, Partial Amendment to the Articles of Incorporation, and Reduction in the Amount of Stated Capital, Capital Reserves and Retained Earnings Reserves

November 21, 2022

To all parties concerned,

Company Name: Hitachi Metals, Ltd. Name of Representative: Mitsuaki Nishiyama Chairperson, President, and CEO (Code: 5486; Prime Market of the Tokyo Stock Exchange) Contact: Izumi Tsubouchi

General Manager, Corporate Communications Dept. (Phone: [phone])

Announcement of Issuance of Class Shares through Third-Party Allotment, Partial Amendment

to the Articles of Incorporation, and Reduction in the Amount of Stated Capital, Capital

Reserves and Retained Earnings Reserves

Hitachi Metals, Ltd. (the "Company") announces that it resolved at its board of directors' meeting held on November 21, 2022 to (i) issue Class A preferred shares (the "Class Shares") through third-party allotment to K.K. BCJ-52 (the "Scheduled Allottee") (the "Capital Increase through Third-Party Allotment"), (ii) partly amend the Articles of Incorporation to establish provisions concerning the Class Shares (the "Amendment to the Articles of Incorporation"), and (iii) reduce the amount of stated capital, capital reserves, and retained earnings reserves after the Capital Increase through Third-Party Allotment (the "Capital Reduction, etc."), as below.

All of the Capital Increase through Third-Party Allotment, the Amendment to the Articles of Incorporation, and the Capital Reduction, etc. will be executed as of January 5, 2023, after the Company's common shares is delisted, and the Share Consolidation (as defined below) takes effect as of January 4, 2023, and the Scheduled Allottee and Hitachi are made the only shareholders of the Company.

1. Capital Increase through Third-Party Allotment

1. Overview of offering

(1)	Payment date	January 5, 2023
(2)	Number of shares to be	1 Class Shares
newly issued
(3)	Issue price	139,730,950,936 yen per share
(4)	Amount of funds to be	139,730,950,936 yen
procured
(5)	Method of offering or	All of the Class Shares will be allotted to K.K. BCJ-52
allotment (Scheduled Allottee)	through third-party allotment.
(6)	Others	For details, please see Exhibit 1 "Conditions of Issuance of
		Class A Preferred Shares."
		•	The preferred dividend rate for the Class Shares is set
		at 5 % per year and the shareholders holding the Class Shares
		(the "Preferred Shareholders") or registered pledgees of the

Class Shares (the "Preferred Registered Share Pledgees") are entitled to receive dividends in priority to the holders of common shares or registered pledgees of common shares. If there is a shortfall in the amount of preferred dividends to the Preferred Shareholders or the Registered Preferred Share Pledgees in a given fiscal year, such shortfall shall be accumulated from the following fiscal year. The Class Shares are participating shares, and the Preferred Shareholders or Registered Preferred Share Pledgees are entitled to receive ordinary dividends in addition to the preferred Dividends.

• The Preferred Shareholders are entitled to, at any time and to the extent provided by laws and regulations, demand that the Company acquire the Class Shares for cash consideration
• The Class Shares do not carry any put options or call options the consideration for which is common shares.
• The Preferred Shareholders do not have voting rights at shareholders meetings.
• Under the terms and conditions of the issuance of the Class Shares, any acquisition of the Class Shares by transfer must be approved by the Company's board of directors.

The issuance of Class Shares is subject to (1) the proposals on

1. the share consolidation to consolidate 57,055,299 shares of the Company's common shares into one share with the effective date being January 4, 2023 (the "Share Consolidation") and
2. the partial amendment to the Articles of Incorporation to abolish the provisions concerning a reduction in the total number of authorized shares and the share units being approved at the extraordinary shareholders meeting to be held on December 9, 2022 (the "Extraordinary Shareholders Meeting (Share Consolidation)"), and the Share Consolidation and the amendment to the Articles of Incorporation taking effect; and

1. the proposals on the Capital Increase through Third-Party Allotment and the Amendment to the Articles of Incorporation being approved by an extraordinary resolution of a shareholders meeting (including a written resolution under Article 319, Paragraph 1 of the Companies Act), and the Amendment to the Articles of Incorporation taking effect.

2. Purposes of and reasons for offering

As announced in the Company's press release dated September 26, 2022 titled "Announcement of Opinion in Support of the Tender Offer by K.K. BCJ-52 for the Shares of Hitachi Metals, Ltd., and Recommendation of Tender" and the press release dated October 26, 2022 titled "Announcement of Results of the Tender Offer by K.K. BCJ-52 for the Shares of Hitachi Metals, Ltd., and Change in a Major Shareholder and an Other Affiliate," the Scheduled Allottee contemplates a series of transactions for the purpose of making the Company its wholly-owned subsidiary (the "Transaction"). As part of the Transaction, the Scheduled Allottee first implemented a tender offer for the Company's common shares (the "Tender Offer") between September 27, 2022 and October 25 2022, in order to acquire all of the Company's common shares (excluding the Company's common shares owned by Hitachi, Ltd. ("Hitachi") (228,221,199 shares) (the "Shares to Be Sold by Hitachi") and treasury shares owned by the Company); as a result, the Scheduled Allottee came to own 152,194,289 shares of the Company's common shares (voting right ownership ratio (Note): 35.60%) as of November 1, 2022 (the commencement date of the settlement of the Tender Offer).

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(Note): The "voting right ownership ratio" is calculated using as a denominator the number of voting rights (4,275,529 units) pertaining to the number of shares (427,552,987 shares), which is obtained after deducting the treasury shares owned by the Company (1,351,266 shares) and the Company's shares equal to less than one unit owned by Hitachi (99 shares), which were not planned to be acquired through the Tender Offer, as of September 30, 2022 from the Company's outstanding shares (428,904,352 shares) as of the same date, and is rounded to the second decimal place.

In addition, as announced in the Company's press release titled "Announcement of Holding an Extraordinary Shareholders Meeting Related to Share Consolidation, Abolition of the Provisions regarding a Share Unit, and Partial Amendment to the Articles of Incorporation" published on November 22, 2022, while the Tender Offer has been completed, as the Scheduled Allottee was not able to acquire all of the Company's common shares (excluding the Shares to Be Sold by Hitachi and the treasury shares owned by the Company) through the Tender Offer, the Scheduled Allottee requested that the Company implement the Share Consolidation in order to make the Scheduled Allottee and Hitachi the only shareholders of the Company (excluding the Company). Upon this request, taking into account that, among other matters, the Tender Offer, which was implemented as part of the Transaction, has been completed, the Company decided to implement the Share Consolidation to consolidate 57,055,299 shares of the Company's common shares into one share as part of the Transaction, subject to the approval of the shareholders at the Extraordinary Shareholders Meeting (Share Consolidation), with the aim of making the Scheduled Allottee and Hitachi the only shareholders of the Company (excluding the Company) (the "Squeeze Out"). If the Share Consolidation takes effect, the number of the Company's shares held by the shareholders other than the Scheduled Allottee and Hitachi as of January 4, 2023, will be a fractional share less than one share.

Furthermore, as announced in the Company's press release dated September 26, 2022 titled "Announcement of Opinion in Support of the Tender Offer by K.K. BCJ-52 for the Shares of Hitachi Metals, Ltd., and Recommendation of Tender," it is planned in the Transaction that the Company will, after completion of the Squeeze Out, repurchase all of the Company's common shares owned by Hitachi after the Share Consolidation (the "Share Repurchase"), and thereby the Scheduled Allottee will ultimately make the Company its wholly-owned subsidiary.

In connection with the Share Repurchase, while the amount of money that the Company will deliver to Hitachi must be within the distributable amount as of the effective date of the Share Repurchase, the distributable amount of the Company before implementation of the Capital Increase through Third-Party Allotment and the Capital Reduction, etc. falls below the total amount of the consideration for the Share Repurchase. Therefore, as a result of consultations between the Company and the Scheduled Allottee, in order to secure a distributable amount required for the Share Repurchase, the Company will implement the Capital Increase through Third-Party Allotment by allotting the Class Shares to the Scheduled Allottee and the Capital Reduction, etc. under Article 447, Paragraph 1 and Article 448, Paragraph 1 of the Companies Act, and implement the Share Repurchase after the Capital Increase through Third-Party Allotment and the Capital Reduction, etc. take effect. The Capital Increase through Third-Party Allotment is a capital increase through third-party allotment to allot the Company's shares to the Scheduled Allottee that was planned as part of the Transaction and enables the implementation of the Capital Reduction, etc. and the Share Repurchase.

It is assumed that all of the Capital Increase through Third-Party Allotment, the Capital Reduction, etc., and the Share Repurchase will be executed as of January 5, 2023, after the Share Consolidation is approved at the Extraordinary Shareholders Meeting (Share Consolidation) and the Company's common shares is delisted, and the Share Consolidation takes effect as of January 4, 2023 and the Scheduled Allottee and Hitachi are made the only shareholders of the Company.

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3. Amount, purpose of use, and scheduled time of paying-out of, funds to be procured

1. Amount of funds to be procured

(i)	Total amount to be paid-in	139,730,950,936 yen
(ii)	Estimated issuance costs	510,000,000 yen
(iii)	Estimated net proceeds	139,220,950,936 yen

(Note) 1. The estimated issuance costs do not include consumption tax or the like

1. 2. The estimated issuance costs include the amount equivalent to the registration and license tax, registration-related expenses, administration fees, attorney fees, and other costs and expenses.

2. Specific purpose of use of funds to be procured

		Specific purpose of use			Amount			Scheduled time of paying-
						out
	(i)	Funds to execute the Share		139,220,950,936 yen		January 2023
	Repurchase

(Note) In order to secure further funds for the Share Repurchase, there is a possibility that in addition to the Capital Increase through Third-Party Allotment, the Scheduled Allottee will provide additional funds to the Company through investments, loans, subscription of corporate bonds (or combination thereof), or other methods in the future.

4. Stance regarding the reasonableness of the purpose of use of funds

The purpose of the Capital Increase through Third-Party Allotment is to secure funds and the distributable amount to execute the Share Repurchase. Accordingly, the Company intends to secure the distributable amount necessary for the Share Repurchase by executing the Capital Reduction, etc. after the effectuation of the Capital Increase through Third-Party Allotment and to appropriate all amounts of the funds to be procured under the Capital Increase through Third-Party Allotment as part of the funds for the Share Repurchase. Because both of these attempts are conducted as part of the Transaction by the Scheduled Allottee, the Company determined that the purpose of use is reasonable.

5. Reasonableness of the terms of issuance, etc.

1. Calculation basis of the amount to be paid-in and specific content thereof

The Company has had a series of discussions with the Scheduled Allottee regarding the method and content of the capital contribution through the Capital Increase through Third-Party Allotment in order to realize fund procurement under the most favorable terms for the Company. As a result of a series of sincere discussions, the amount to be paid-in for the Class Shares was decided to be 139,730,950,936 yen per share. The Company deems the amount to be paid-in as reasonable because the amount was agreed between the Company and the Scheduled Allottee, who will be the sole shareholder of the Company upon the execution of the Share Repurchase.

Nevertheless, there is no objective market price for the Class Shares; further, the evaluation of class shares is very sophisticated and complex, and there can be a variety of views regarding their evaluation. Accordingly, because the Company cannot completely deny the possibility that the amount to be paid- in for the Class Shares will be deemed, under the Companies Act, particularly favorable for the Scheduled Allottee, the Company decided, for the sake of thoroughness, to issue the Class Shares on condition that it will obtain approval by a special resolution of a shareholders meeting (including a resolution in writing pursuant to Article 319, Paragraph 1 of the Companies Act) regarding a favorable issuance pursuant to Article 199, Paragraph 2 of the Companies Act. Upon the effectuation of the Share Consolidation on January 4, 2023, the Company intends to substitute the written consent of the

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Scheduled Allottee and Hitachi, being the Company's shareholders at that time, for the special resolution of the shareholders meeting; accordingly, for the Capital Increase through Third-Party Allotment, the Company shall not hold a shareholders meeting constituted by those who are the Company's shareholders before the effectuation of the Share Consolidation.

1. Basis for the determination that the number of shares to be issued and the level of dilution of the shares are reasonable

The number of the Class Shares to be issued (1 share) is set at the amount necessary for the purpose of the Capital Increase through Third-Party Allotment, which is securement of the funds and the distributable amount for executing the Share Repurchase. Accordingly, the Company determined that the number of shares to be issued under the Capital Increase through Third-Party Allotment is reasonable.

Further, there will be no dilution of the Company's common shares held by existing shareholders as a result of the Capital Increase through Third-Party Allotment because the Class Shares are non-voting shares and do not carry any put options or call options the consideration for which is common shares.

6. Overview of the Scheduled Allottee

1. Overview of the Scheduled Allottee

(1)	Name			K.K. BCJ-52
(2)	Location		5F, Palace Building 1-1-1 Marunouchi, Chiyoda-ku, Tokyo
(3)	Name	and title	of	Yuji Sugimoto, Representative Director
representative
(4)	Type of business		Acquire and own shares of the Company, and control and manage
				the Company' business activities
(5)	Amount of capital		300,025,000 yen (as of October 26, 2022)
(6)	Date of foundation		April 23, 2021
(7)	Major	shareholders	and	G.K. BCJ-51 (Shareholding ratio: 100.00%)
shareholding ratio

1. Relationship between the Company and the Scheduled Allottee

Capital relationship	The Scheduled Allottee owns 152,194,289 shares of the
Company's common shares as of today (November 21, 2022).
Personnel relationship	Not applicable
Transaction relationship	Not applicable
Status as related party	Not applicable

(Note) 1. The Scheduled Allottee is a wholly owned subsidiary of G.K. BCJ-51 in which an investment fund for which Bain Capital Private Equity, LP and its group provide investment advice, a fund managed, operated, and informed by Japan Industrial Partners, Inc. and a fund managed by Japan Industrial Solutions Co., Ltd. indirectly owned the entire stake.

2. As the Company received an explanation from the Scheduled Allottee that it and its officers and major investors are not antisocial forces or do not have any relationship with antisocial forces and received its representation and warranty to that effect in the share subscription agreement, the Company has determined that neither the Scheduled Allottee nor its related parties are antisocial forces nor do they have any relationship with antisocial forces.

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