Basic Agreement for Thai Motorcycle Joint Venture -- Yamaha Motor Acquires Majority Stake

The Thai motorcycle manufacturing and marketing joint venture company Siam Yamaha Co., Ltd. (SYC) has recently reached a basic agreement with its supporting banks for the continuation of its business activities. The main components of the agreement include a restructuring of SYC's debt and continued development of its business activities under a new organization in which Yamaha Motor Co., Ltd. (YMC) will be the majority stock holder.

Until now, SYC has been a joint venture capitalized with KPN Holding Co., Ltd. and YMC at an investment ratio of 72% and 28% respectively. Under this organization, in which KPN Holding has assumed the management leadership role, the company has suffered serious business setbacks in the face of sharply reduced demand due to the economic recession caused by the Asian currency crisis.

Under the basic agreement, added support from YMC and the banks involved will raise SYC's capitalization from the present 2.5 billion bahts to 4.1 billion bahts (approx. 11.5 billion yen). The new investment ratio will be 51% by YMC, 34% by the banks and 15% by KPN Holding, with YMC taking the leadership role in the company's management as of July 2000. Furthermore, the two manufacturing companies supplying parts to Siam Yamaha (IPC and ICC) that KPN Holding presently holds majority stock shares in will become 100% owned subsidiaries of SYC under the new organization.

With the conclusion of the basic agreement, YMC is confident that it will be able to make effective use of the manufacturing, marketing and technological know-how that are the foundation of Yamaha's global corporate activities for the development of SYC's business and also in fulfilling its corporate responsibility in the Thai motorcycle market.

From its peak demand of 1.46 million units in 1995, the Thai motorcycle market plunged to a demand of 530,000 units in 1998 due to the economic recession caused by the Asian currency crisis. However, last year demand recovered somewhat to an estimated level of 600,000 units and because of the inherent convenience of motorcycles as a means of transportation, that demand is expected to continue to increase as the economy as a whole recovers, even expanding to higher levels than before the crisis.

Anticipating a recovery in the Thai motorcycle market, YMC's goal under the new organization will be to develop models that truly fit the needs of the Thai market and institute highly efficiency manufacturing that will enable SYC to expand its present manufacturing and sales levels threefold to an annual production of about 300,000 units by the year 2005. At the same time, we will strive to establish the company's role in the future as an important manufacturing base for complete motorcycles and intra-regional parts supply for the future that can contribute to the growth of motorcycle demand in the Asia.