The court-appointed trustees of Toshin Holdings have set out how creditors, not new investors, would supply the first layer of its recapitalisation. Toshin entered court-supervised restructuring in May after two accounting scandals (earlier coverage). Under the rehabilitation plan filed with the Tokyo District Court on September 9 and published on October 2, up to 4,884,884 Class A shares would be issued at ¥130 each. Creditors would pay for them by cancelling an estimated ¥635mn of interest and penalty interest claims. No cash comes in.
What creditors would get
The named recipients are 12 lenders (including SMBC and Seto Shinkin Bank), the leasing company NEC Capital Solutions and a Toshin subsidiary. SMBC would take 2,120,190 shares, or 18.84% of the votes on the plan's estimates, which would make it the second-largest shareholder. Only interest and penalty claims are converted. Loan principal and secured claims are not. The notice says the trustees expected it to be hard to win lenders' understanding for converting principal, and that converting secured claims would strip creditors of their security rights, which could be inequitable.
Class A shares carry votes but no dividend and rank equally with common shares in liquidation. Transfers need board approval. Toshin can buy them back at the issue price if a sponsor signs, if a delisting is decided, or with court permission. It can also convert them to common stock with court permission, at a price reset every six months to a 30-trading-day average and held between ¥130 and ¥600. After 15 years Toshin is to acquire all Class A shares for cash equal to the issue price, up to the distributable amount; any shares it cannot buy for cash would be exchanged for common shares.
The notice says none of the named allottees has agreed to take the shares or voted on the plan. Its main text gives 4,884,884 as the maximum share count, while the issue-terms annex lists 4,658,179. Both are described as unfixed.
Ownership and dilution
Toshin estimates that holders linked to its founder, meaning the founder, relatives and his asset companies, would fall from about 46% of votes to about 26%, with creditors holding about 43%. A further optional layer could cut the founder-linked stake to about 20% at most, in the notice's maximum case with every first warrant exercised at the ¥200 floor. Those are 700 warrants at ¥1,788 each, exercisable only by handing over frozen claims, at 95% of a 30-day average price within a ¥200 to ¥600 band. Potential shares are capped at 3,500,000.
The company's own maximum dilution is 76.7% for Class A shares, measured against 63,712 votes at September 7. It rises to 131.6% with all warrants exercised at the ¥200 floor. An outside lawyer gave an opinion on October 2 that the swap is necessary and appropriate. An independent valuer put Class A at ¥34.5 a share against the ¥130 price.
Cash tranches with no buyers
The plan also reserves room for new money: up to 6,536,800 common shares at ¥150 or more, up to 6,536,800 Class B shares at ¥100 or more, and up to 2,000 second warrants. The reference total is ¥4.67bn on stated assumptions. Recipients are undecided. The notice says the trustees obtained no realistic proposal to take the mobile-telecom, property-leasing and golf-resort businesses together and selected no sponsor by the plan deadline, though the search continues. If a sponsor appears, the swap could be halted in whole or part, or Class A shares bought back.
| Instrument | Recipients | Maximum size | Price terms |
|---|---|---|---|
| Class A shares | 14 named creditors (estimate) | 4,884,884 shares | ¥130 a share, paid by cancelling claims |
| First warrants | Creditors who opt in | 700 units, up to 3,500,000 shares | ¥1,788 a unit; exercise at 95% of 30-day average, ¥200 to ¥600 |
| Common shares | Not yet chosen | 6,536,800 shares | ¥150 or more, cash |
| Class B shares | Not yet chosen | 6,536,800 shares | ¥100 or more, cash |
| Second warrants | Not yet chosen | 2,000 units | ¥1,788 a unit assumed for reference; ¥2bn exercise proceeds at maximum |
Capital cut and conditions
A separate notice says capital would drop by ¥642.1mn to ¥100mn and the capital reserve by ¥880.6mn to zero on the day the court approves the plan. These are transfers within net assets, so net assets do not change, and the freed surplus can offset accumulated losses. A second cut would trim capital raised from any cash shares paid in within three months of the approval becoming final.
Nothing takes effect yet. Written voting by secured creditors, unsecured creditors and shareholders runs from October 29 to November 16, 2026. Toshin expects court approval around mid-November, and the share issues would follow only after that approval becomes final.