Notice Regarding Borrowing of Funds with Financial Covenants and Conclusion of Commitment Line Agreement

Akatsuki Inc. has secured significant financing arrangements to facilitate strategic corporate activities, specifically the acquisition of SUNNY SIDE UP GROUP Inc. through a tender offer and the repurchase of treasury shares. These financial maneuvers, authorized by the Board of Directors on May 13, 2026, involve a combination of a direct loan and a commitment line agreement with Mizuho Bank, Ltd. to ensure liquidity for these capital-intensive initiatives.

The primary borrowing consists of a JPY 15,442 million loan maturing on July 31, 2028, which carries a floating interest rate based on the Japanese Yen TIBOR plus a 1% spread. This loan is subject to specific financial covenants, including a gross leverage ratio cap of 8.4 times and a net leverage ratio cap of 3.1 times. Furthermore, the company is mandated to maintain profitability, avoiding consecutive fiscal years of losses in ordinary and net income, and must preserve at least 75% of its net assets relative to the preceding fiscal year.

In addition to the long-term loan, a commitment line agreement provides up to JPY 7,590 million in credit through December 30, 2026. This facility, intended for the settlement of treasury share purchases, operates at the short-term prime rate and does not include financial covenants. While these agreements represent a substantial commitment of capital, the company anticipates that the overall impact on its consolidated financial results will remain immaterial. These measures reflect a structured approach to financing growth and capital management within the Japanese market, with ongoing monitoring required to ensure compliance with the established leverage and performance thresholds.