3D Sends Open Letter to New Outside Directors of Fuji Soft Incorporated

Welcomes the Appointment of New Independent Outside Directors

Releases Comprehensive Corporate Value Enhancement Plan

Requests the New Outside Directors Examine 3D’s Plan and Develop Targets for Capital Efficiency, Operating Margin and Cash Flow per Share Growth that Are at Least as Ambitious as 3D’s Plan
TOKYO–(BUSINESS WIRE)–3D Investment Partners Pte. Ltd. as investment manager of 3D OPPORTUNITY MASTER FUND (together, “3D,” “we,” “us” or “our”), the largest shareholder of Fuji Soft Incorporated (“Fuji Soft” or the “Company”), today sent a letter to the newly elected members of Fuji Soft’s Board of Directors (the “Board”).

In the letter, 3D congratulates the new independent outside directors on their election and for their willingness to provide active and engaged oversight of the Company’s strategy, capital allocation, operations and management. We believe all Fuji Soft shareholders welcome the new directors and the objective oversight they will provide.

3D attached a comprehensive plan for enhancing the corporate value of Fuji Soft (the “Plan”) to the letter it sent to each of the new independent directors. In the Plan, 3D proposes concrete measures to drive meaningful improvements to the Company’s performance and operations so that Fuji Soft can reach its full potential and maximize corporate value. 3D urges the new outside directors to take the initiative in examining 3D’s Plan and ensure Fuji Soft’s business plan incorporates targets for capital efficiency, operating margin, and cash flow per share growth that are at least as ambitious as those in the 3D Plan.

A public version of 3D’s corporate value enhancement plan is available here (Some information is not disclosed in the public version): https://www.3dipartners.com/engagement/fujisoft-presentation-on-corporate-value-enhancement-plan-jp-202212.pdf

The full text of the letter is copied below:

December 4, 2022

Mr. Takao Tsuji
Mr. Hidetaka Nishina
Mr. Hikari Imai
Mr. Yuya Shimizu
Mr. Shintaro Ishimaru

Fuji Soft Incorporated
1-1 Sakuragi-cho, Naka-ku, Yokohama City, Kanagawa Prefecture

Re: 3D’s Expectations for the New Independent Outside Directors

Dear New Members of the Board,

3D Investment Partners Pte. Ltd. as investment manager of 3D OPPORTUNITY MASTER FUND (together, “3D,” “we,” “us” or “our”), is the largest shareholder of Fuji Soft Incorporated (“Fuji Soft” or the “Company”).

We congratulate you on being elected to serve on the Fuji Soft Board of Directors (the “Board”). As you know, we have been urging Fuji Soft to improve its operations, capital allocation and governance for more than two years. Over this period, we have believed that the Board would benefit from more independent outside directors that have relevant expertise, and we are pleased shareholders have elected you to fill that critical role at the EGM we requested. We have high expectations for you: we believe you can provide more effective oversight and ensure that Fuji Soft delivers on its corporate commitments and opportunities, especially to its shareholders. We look forward to the future of the Company under your stewardship.

As new members of the Board, you will have significant influence over the development and execution of the Company’s strategy. To that end, we wanted to make you aware of the corporate value enhancement plan (the “Plan”) that 3D has previously presented to members of the Board and management team. A copy of the Plan is attached.

Fuji Soft has suffered from weak profit margins, low returns on equity and poor shareholder returns due to inefficient capital allocation, an unfocused growth strategy and weak corporate governance. In the Plan, 3D proposes concrete measures that integrate capital efficiency improvement, business efficiency improvement and cash flow per share growth through reinvestment in core businesses. We believe the implementation of these measures will drive meaningful improvements to the Company’s performance, operations and margins so that Fuji Soft can reach its full potential.

3D’s Plan is not based solely on superficial quantitative analysis. For example, Fuji Soft management has recently stated in interviews that Fuji Soft’s low profit margin is due to its unique business model. However, even Systena, a company with a very similar business model, has higher margins. Based on our detailed analysis, one of the main drivers of the low margin is entirely within Fuji Soft’s control: an organizational structure that is not in line with the business unit cost. 3D’s Plan proposes specific approaches to address such issues based on a detailed analysis of the situation.

Our only goal is for Fuji Soft to thrive and maximize its corporate value over the mid-to-long term. 3D requests the new outside directors to take the initiative in examining 3D’s Plan and also use it as reference for the Corporate Value Enhancement Committee. 3D also urges the new outside directors to provide independent oversight of management by comparing the corporate value enhancement measures developed by management against the 3D Plan. This is one way to ensure that the Company’s targets for capital efficiency, operating margin and cash per share growth are at least as ambitious as 3D’s plan and aimed at maximizing corporate value.

This election offers an opportunity for Fuji Soft to turn a new page and take decisive action to reposition the Company for success. Fuji Soft’s shareholders deserve nothing less than a Board that is focused on fulfilling the Company’s promise, and we will be watching the Board and Corporate Value Enhancement Committee with great interest over the coming months.

We look forward to working constructively with you and the rest of the Board and management team to achieve our mutual goal of realizing the Company’s full corporate value.

Sincerely,
3D Investment Partners

About 3D Investment Partners Pte. Ltd.

3D Investment Partners Pte. Ltd. is an independent Singapore-based Japan focused value investing fund manager founded in 2015. 3D Investment Partners Pte. Ltd. focuses on partnering with managements who share its investment philosophy of medium- to long-term value creation through compound capital growth and a common objective of achieving long-term returns.

Disclaimer

This press release is provided for informational purposes only and does not constitute an offer to purchase or sell any security or investment product, nor does it constitute professional or investment advice. This press release should not be relied on by any person for any purpose and is not, and should not be construed as investment, financial, legal, tax or other advice.

3D Investment Partners Pte. Ltd. and its affiliates and their related persons (“3DIP”) believe that current market price of Fuji Soft does not reflect its instinct value. 3DIP acquired beneficially and/or economic interest based on its own idea that Fuji Soft securities have been undervalued and provides attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, Fuji Soft securities. 3DIP intends to review its investments in the Fuji Soft on a continuing basis and, depending upon various factors including, without limitation, the Fuji Soft’s financial position and strategic direction, the outcome of any discussions with Fuji Soft, overall market conditions, other investment opportunities available to 3DIP, and the availability of Fuji Soft securities at prices that would make the purchase or sale of Fuji Soft securities desirable, 3DIP may, from time to time (in the open market or in private transactions), buy, sell, cover, hedge, or otherwise change the form or substance of any of its investments (including the investment in Fuji Soft securities) to any degree in any manner permitted by any applicable law, and expressly disclaims any obligation to notify others of any such changes.

3DIP provides no representation or warranty, either expressed or implied, in relation to the accuracy, completeness, or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets, or developments referred to herein. 3DIP expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents as a whole or in part by any person, or otherwise howsoever arising in connection with this press release. 3DIP hereby expressly disclaims any obligation to update or provide additional information regarding the contents of this press release or to correct any inaccuracies in the information contained in this press release.

3DIP disclaims any intention or agreement to be treated as a joint holder (kyodo hoyu sha) under the Financial Instruments and Exchange Act of Japan, a closely related party (missetsu kankei sha) under the Foreign Exchange and Foreign Trade Act with other shareholders, or receiving any power or permission to represent other shareholders in relation to the exercise of their voting rights, and has no intention to solicit, encourage, induce or require any person to cause other shareholders to represent such voting rights.

3DIP does not have the intention to make a proposal, directly or through other shareholders of Fuji Soft, to transfer or abolish the business or asset of Fuji Soft and/or Fuji Soft group companies at the general shareholders meeting of Fuji Soft. 3DIP does not have the intention and purpose to engage in any conduct which constricts the continuing and stable implementation of business of Fuji Soft and/or Fuji Soft group companies.

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In respect of information that has been prepared by 3DIP (and not otherwise attributed to any other party) and which appear in the English language version of this press release, in the event of any inconsistency between the English language version and the Japanese language version of this press release, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.
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