Shinto Holdings, Inc. (TSE: 2776) told investors on August 19, 2026 that cash it raised through a 2024 share placement and two rounds of stock acquisition rights was spent differently from what it had promised, and that the payments went out before its board approved the change or before any public notice was issued.
The scrap-metal and materials trader announced the financing on October 30, 2024: a new-share placement paid in on November 15, 2024, plus its 7th and 8th warrants exercised over the following months. The original plan was simple: send money to an iron and non-ferrous scrap metal subsidiary and a plastics-trading subsidiary to fund their purchases, and use the remainder for the parent company's own metal purchases.
That is not quite what happened. The ¥149.2mn raised from new shares was supposed to flow to its iron and non-ferrous scrap metal subsidiary as a loan before it bought metal; instead Shinto paid metal suppliers directly, skipping the subsidiary. Net of ¥6.6mn in issuance costs, ¥142.6mn went straight into purchases the parent made itself.
The warrant proceeds tell a bigger story. Of the ¥1.35bn originally earmarked, the company now says ¥205mn less went to its own metal purchases than planned, with the difference redirected into five new categories: rent and payroll, a bank loan repayment, a repayment to a related company, a repayment to an individual, and a loan to another subsidiary to fund its own inventory purchases.
| Use of funds | Originally disclosed | Revised plan | Actually spent |
|---|---|---|---|
| Iron/non-ferrous scrap subsidiary | ¥850.8mn | ¥850.8mn | ¥360.9mn |
| Plastics subsidiary | ¥55.0mn | ¥55.0mn | ¥20.0mn |
| Parent company (metal purchases) | ¥447.5mn | ¥242.5mn | ¥73.7mn |
| Working capital (rent, salaries) | — | ¥13.6mn | ¥13.3mn |
| Bank loan repayment | — | ¥1.4mn | ¥1.4mn |
| Related-company loan repayment | — | ¥87.0mn | ¥87.0mn |
| Individual loan repayment | — | ¥23.0mn | ¥23.0mn |
| Loan to another subsidiary | — | ¥80.0mn | ¥80.0mn |
| Total | ¥1.35bn | ¥1.35bn | ¥659.2mn |
As of the end of January 2026, actual warrant proceeds, reduced by an earlier cut to the exercise price, totalled ¥659.2mn, and the company says all of it has already been spent, mostly across that reshuffled list of uses.
Shinto's own account of what went wrong is unusually candid. The company says it prioritized group-wide cash needs over checking payments against what it had told the market, and its management of the raised funds fell short of the segregated handling it had promised in the October 2024 disclosure. The board only ratified the changed use of proceeds, and the company only disclosed it, after the money was already spent.
Shinto says its remedies now include a dedicated fund-tracking ledger, a segregated account for future raises, a two-person sign-off before any use-of-proceeds payment, an automatic payment freeze if a mismatch is spotted, and monthly reporting to the board and statutory auditors. The company maintains the total amount raised is unchanged and that the reshuffling has no effect on group consolidated results. Warrants from the 7th and 8th rounds remain partly unexercised, so further use-of-proceeds disclosures could still follow.