Kobe Bussan's board resolved on 29 September to issue a ¥60bn zero-coupon convertible bond due 2033 and to authorise a share buyback of up to ¥40bn, which the company describes as the largest in its history. The two are built as one transaction: about ¥30bn of the bond proceeds funds repurchases, and about ¥30bn pays for a group of airline caterers bought through a joint venture.
The package follows a profit fall Tokyo Brief reported on 11 September. It is a separate capital decision, and it carries several conditions that are still open.
Where the ¥60bn goes
The company expects about ¥60bn of proceeds. In its extraordinary report it puts issuance costs at about ¥260mn and net proceeds at about ¥59.74bn. Roughly ¥30bn is earmarked for the purchase of shares in 15 companies that run in-flight catering in the Asia-Pacific and North America, bought through MEAL HUB, a venture in which Kobe Bussan holds 75% and its partner 25%. The targets form the Asia-Pacific arm of the LSG group and operate in Canada, New Zealand, Hong Kong, South Korea, Thailand and elsewhere. The company says the money is to be spent on that purchase by 31 October 2026.
The other ¥30bn goes to the buyback. Kobe Bussan will add about ¥10bn of its own cash to reach the ¥40bn ceiling. The authorisation covers up to 16,000,000 shares, about 7.21% of shares outstanding excluding treasury stock at 31 July, and runs from 30 September 2026 to 30 April 2027. The ¥40bn ceiling equals about 22.86% of consolidated shareholders' equity on that date. A ceiling is not a purchase: the notice says market conditions may leave some or all orders unexecuted.
The first day of buying
Kobe Bussan has placed an order on the Tokyo Stock Exchange's ToSTNeT-3 off-auction system for 8:45am on 30 September. It covers 13,472,500 shares at ¥2,969, the 29 September close, for ¥39,999,852,500 in total, and the share count will not change. The company will publish the result after trading. If less than the cap is bought that way, it plans to keep buying after 30 September, depending on market conditions and rules.
The stated reason is supply and demand. The company expects some overseas institutions buying the bond to short its shares as a hedge, and says the off-auction purchase should absorb that selling and ease the short-term effect on the share price. It also expects the purchase to help the bond's terms. Repurchased shares are earmarked for stock-option exercises and for shares delivered on conversion.
Bond terms and dilution
| Term | Detail |
|---|---|
| Size | ¥60bn |
| Coupon | 0.0% |
| Payment amount / offer price | 100.0% of par / 102.5% of par |
| Payment date | 15 October 2026 |
| Maturity | 30 September 2033 |
| Investor put | 30 September 2031, at 100% of par |
| Conversion trigger | Close above 150% of conversion price for 20 trading days to a quarter-end (130% from 1 July 2032) |
| Initial conversion price | Not set; not below 1.0x the closing price on the underwriting date |
| Listing | Singapore Exchange |
The initial conversion price is not set. It cannot fall below the closing price on the day the underwriting agreement is signed, and the company says it intends to set it above the market price at pricing. It will not publish potential dilution until the price is fixed.
The company says the design limits dilution. Holders can convert only after the shares close above 150% of the conversion price (130% from 1 July 2032) for each of the 20 trading days to a quarter-end, with exceptions. From October 2031, conversions are settled with cash for the par amount and shares only for the excess. The bond is unsecured, unrated and to be listed in Singapore. The company says its earnings forecast is unchanged.
Separately, J-Link Limited said it may buy part of the bond to pass credit exposure to credit investors and warrant-style exposure to others. Its potential voting rights could reach 9.18% of the total as of 30 April 2026, calculated at an assumed conversion price equal to the 28 September close. J-Link said it will not exercise the rights or vote, and that whether it buys, and how much, is undecided. Kobe Bussan said it is not involved in J-Link's transaction.
The next fixed dates are the 30 September buyback result and the 15 October payment date.