Le Lézard
Classified in: Science and technology
Subjects: Proxy/Proxy Vote, Statement

3D Releases Updated Investor Presentation Responding to Fuji Soft and Outlining Why 3D's Nominees Are Needed as New Outside Directors

3D Investment Partners Pte. Ltd. as investment manager of 3D OPPORTUNITY MASTER FUND (collectively, "3D," "we," "us" or "our") today published an updated presentation regarding its shareholder proposals to enhance the composition of the Board of Directors (the "Board") of Fuji Soft Incorporated ("Fuji Soft" or the "Company") at the Company's Extraordinary General Meeting of Shareholders (the "EGM"), to be held on December 4, 2022.

The presentation is available at:

3D currently owns more than 21% of Fuji Soft and is the Company's largest shareholder. Prior to 3D's involvement, Fuji Soft's Board had presided over a long period of inefficient capital allocation and weak performance. The Company's return on equity is about half of the industry median, and its operating profit margin and operating profit per employee are the lowest in the industry. 3D believes these issues are a direct result of an "asset heavy" investment strategy with an emphasis on owning real estate and a "sales over profit" operating strategy that prioritizes growth over efficiency.

3D has identified and analyzed five issues that must be addressed to drive corporate value at Fuji Soft: 1) allocation of capital to office real estate, 2) maintenance of the listed subsidiary corporate structure, 3) poor profit margins, 4) undisciplined growth strategies and 5) suboptimal corporate governance. 3D has provided the Board with several hundred pages of analysis on these topics to assist the Company in creating value.

Fuji Soft's only substantive response has been to empanel a Corporate Value Enhancement Committee (the "Committee"). 3D does not believe the Committee is capable of solving the inherent problems at Fuji Soft. This Committee is comprised of the entire Board ? the same incumbent directors who have previously failed to address or even recognize the Company's underperformance. In our view, the incumbent directors lack the necessary expertise and independence to objectively examine and remedy Fuji Soft's shortcomings.

To address the lack of expertise and independence on the Board, 3D nominated four new, independent outside directors to the Company's Board. These four candidates ? Shintaro Ishimaru, Kotaro Okamura, Yuya Shimizu and Takashi Tsutsui ? are entirely independent of 3D and Fuji Soft and bring much-needed expertise in key areas. We believe they are well qualified to improve Fuji Soft's capital allocation, operating strategies and corporate governance.

In an apparent effort to minimize the impact of 3D's campaign and dilute the influence of our four candidates, Fuji Soft belatedly nominated three new candidates of its own. These candidates appear to have been hastily identified. In conversations with 3D, all three candidates confirmed that Fuji Soft had contacted them only after 3D approached the Company to convene the EGM. Nevertheless, after serious and objective consideration of the qualifications of these candidates, 3D has decided to support one of Fuji Soft's candidates, Hikari Imai, whom 3D believes would strengthen the functioning of the Board. 3D does not believe that Fuji Soft's other candidates have the independence or expertise necessary to contribute to the Fuji Soft Board.

3D has continued its efforts to work constructively with the Company to reach an agreement to enhance the Board by appointing our candidates. However, as a precondition to a constructive resolution, Fuji Soft insisted on imposing onerous restrictions upon 3D's rights as a shareholder, including limiting 3D's right to purchase additional Fuji Soft shares on the open market and preventing 3D from submitting shareholder proposals at future annual or extraordinary general meetings. 3D found Fuji Soft's attempt to limit its rights inappropriate and rejected these unreasonable demands.

On November 14, Fuji Soft claims in its convocation notice that such constraints are necessary to ensure "the effective independence of 3D's candidates."1 This concern is completely unfounded. As a show of good faith, on November 4, 3D submitted a formal written and signed pledge to the Company unequivocally guaranteeing the independence of the four 3D candidates. In the pledge, 3D affirmed that it does not have any current or past commercial or business relationships with the candidates, including compensatory arrangements, nor does it have any plans to enter into such relationships in the future. If elected, 3D's candidates would be bound by the same laws, regulations and Company governing documents as all other directors, and 3D represented that it would not directly or indirectly encourage its candidates to violate these obligations. 3D and Fuji Soft negotiated the language of the representation together, and 3D was informed that "legal" at Fuji Soft confirmed the terms of the pledge and was requested to submit the pledge to the Company. Fuji Soft's convocation notice omits any mention of 3D's pledge, which causes serious misleading of the shareholders.

In our view, Fuji Soft's continued attempts to minimize shareholder influence and avoid accountability demonstrate why new, independent outside directors are required. Our four candidates, if appointed, are committed to working to enhance corporate value.

3D encourages its fellow shareholders to vote in favor of our proposal to appoint four new independent outside directors, and to support Mr. Imai, at Fuji Soft's upcoming EGM. We are confident that these five candidates bring the fresh, independent perspectives necessary to thoroughly and objectively evaluate Fuji Soft's opportunities to increase corporate value.

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.


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 ("3D") believe that the current market price of Fuji Soft does not reflect its intrinsic value. 3D acquired beneficial and/or economic interests based on its own idea that Fuji Soft securities have been undervalued and provides an attractive investment opportunity and may in the future beneficially own and/or have an economic interest in, Fuji Soft securities. 3D intends to review its investments in Fuji Soft on a continuing basis and, depending upon various factors including, without limitation, Fuji Soft's financial position and strategic direction, the outcome of any discussions with Fuji Soft, overall market conditions, other investment opportunities available to 3D, and the availability of Fuji Soft securities at prices that would make the purchase or sale of Fuji Soft securities desirable, 3D 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.

3D provides no representation or warranty, either express 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. 3D expressly disclaims any responsibility or liability for any loss howsoever arising from any use of, or reliance on, this press release or its contents in whole or in part by any person, or otherwise howsoever arising in connection with this press release. 3D 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.

3D 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 having received 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.

3D does not have the intention to make a proposal, directly or through other shareholders of Fuji Soft, to transfer or abolish the business or assets of Fuji Soft and/or Fuji Soft group companies at the general shareholders' meeting of Fuji Soft. 3D 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.

This press release may include content or quotes from news coverage or other third-party public sources ("Third-Party Materials"). Permission to quote from Third-Party Materials in this press release may neither have been sought nor obtained. The content of the Third-Party Materials has not been independently verified by 3D and does not necessarily represent the views of 3D. The authors and/or publishers of the Third-Party Materials are independent of, and may have different views to 3D. The quoting of Third-Party Materials in this press release does not imply that 3D endorses or concurs with any part of the content of the Third-Party Materials or that any of the authors or publishers of the Third-Party Materials endorses or concurs with any views which have been expressed by 3D on the relevant subject matter. The Third-Party Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues.

Please note that this press release is prepared in English only and that the press release, if any, to be released by 3D in Japanese language close in time may not necessarily be the same as this press release. In the event of any inconsistency between the English language press release and the Japanese language press release, the meaning of the Japanese language press release shall prevail unless otherwise expressly indicated.

1 Fuji Soft Notice of Convocation of the Extraordinary General Meeting of Shareholders, November 18, 2022.

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News published on 17 november 2022 at 08:40 and distributed by: