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55Hitachi, Ltd. Annual Report 2005
A subsidiary pledges equity securities issued by its subsidiary as collateral for bank loans totaling ¥477 million ($4,458
thousand). The collateralized number of shares and the fair value as of March 31, 2005 are as follows:
Collateralized Fair value as of March 31, 2005
Number of number
shares owned Percent of of shares Millions Thousands of
Subsidiary name in thousands ownership in thousands of yen U.S. dollars
Hitachi Powdered Metals Co., Ltd. . . . . . . . . . 17,072 53.3% 2,000 ¥1,614 $15,084
In addition, some other assets are collateralized for bank loans of certain subsidiaries as described in note 17.
As is customary in Japan, both short-term and long-term bank loans are made under general agreements which provide
that securities and guarantees for present and future indebtedness will be given upon request of the bank, and that the
bank shall have the right, as the obligations become due, or in the event of their default, to offset cash deposits against
such obligations.
Generally, the mortgage debenture trust agreements and certain secured and unsecured loan agreements provide, among
other things, that the lenders or trustees shall have the right to have any distribution of earnings, including the payment of
dividends and the issuance of additional capital stock, submitted to them for prior approval and also grant them the right
to request additional securities or mortgages on property, plant and equipment.
In October, 2004, the Company issued Euro yen zero coupon convertible bonds. The bonds consist of ¥50,000 million
($467,290 thousand) series A zero coupon convertible bonds due 2009 and ¥50,000 million ($467,290 thousand) series B
zero coupon convertible bonds due 2009. The bondholders are entitled to stock acquisition rights effective from November
2, 2004 to October 5, 2009. The initial conversion price is ¥1,009 ($9.43) per share, which will be adjusted to no less than
¥822 ($7.68) on October 19, 2005 and October 19, 2007 for series A zero coupon convertible bonds, and April 19, 2006
and April 19, 2008 for series B zero coupon convertible bonds. During the conversion period, the bondholders may
exercise the stock acquisition rights anytime after the closing price of the Company’s shares at the Tokyo Stock Exchange
on at least one trading day is 115 percent or more of the then applicable conversion price rounded down to the nearest
yen. In addition, the bondholders are entitled, at its option, to require the Company to redeem the bonds at a redemption
price of 100 percent of the principal amount on October 17, 2008.