3D Emphasizes the Need for Substantial Board Change at Fuji Soft

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 responded to the investor presentations released by Fuji Soft in November 2022.

3D had the following reaction:

Fuji Soft’s underperformance has been due to its stubborn adherence to a misguided “sales over profit” strategy that prioritizes revenue growth over efficiency and an “asset heavy” investment strategy that emphasizes real estate ownership. As a direct result of weak corporate governance and these strategies, Fuji Soft has suffered from poor shareholder returns, weak profit margins and low returns on equity.

Now, in an apparent response to 3D’s investor presentation issued on November 18, the Company has – for the first time – acknowledged several of these longstanding performance issues. Fuji Soft has committed to ensuring the returns on its investments exceed a hurdle rate (its cost of capital plus a spread) and is, supposedly, considering the liquidation of its real estate. Most recently, in a new presentation released on November 28, the Company has finally publicly recognized that its mid-term margin targets are too low and has committed to profit margin improvement. These commitments, though very late in coming, represent welcome initial steps toward Fuji Soft realizing its full corporate value.

That said, these commitments do not go far enough. Moreover, in our view, the Company would never have made these commitments without 3D’s consistent and public demands to improve performance and the private engagement of other shareholders. We have been urging the Company to review and change its operating and investment strategy for over two years and are just now seeing the Company acknowledge the issues. Shareholders might reasonably question the sincerity of these commitments given their timing, with a critical shareholder vote just days away.

In our view, there is much more work to be done at Fuji Soft to enhance value and to execute on these commitments. We are skeptical that this Board, which has presided over a long period of inefficient capital allocation and weak performance, will deliver on its promises absent the oversight of strong, independent outside directors. We believe it would be a mistake for shareholders to interpret the Company’s belated, piecemeal and long-overdue commitments as evidence that Fuji Soft has fully and sincerely embraced change.

To hold Fuji Soft accountable, we believe that the Board of Directors must be strengthened through the addition of new outside directors who are entirely independent of 3D and Fuji Soft and bring much-needed expertise in key areas. 3D therefore encourages our fellow shareholders to vote in favor of our proposal to appoint the four, highly qualified and independent outside director candidates that we have nominated to the Board. In our view, the addition of all four of these candidates – Shintaro Ishimaru, Kotaro Okamura, Yuya Shimizu and Takashi Tsutsui – is necessary to provide effective oversight and ensure that Fuji Soft delivers on its commitments to shareholders.

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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