Carlyle Concludes Stock Swap Agreement with Kito Corp.

Tokyo, Japan, -- Global private equity firm The Carlyle Group today announced that it entered into a Stock Swap Agreement with Kito Corp.—whereby Kito is to become a fully-owned subsidiary of Carlyle—based on the resolutions by the Boards of Directors of both companies.

Carlyle became Kito’s parent after acquiring 19,388,172 Kito shares (89.65% of all outstanding shares) in a tender offer that commenced July 18, 2003. Carlyle is to conduct a stock swap—based on approval received from the Ministry of Economy, Trade and Industry (“METI”) on July 17, 2003 of a Business Transfer & Restart Plan in accordance with the stipulations of the Revised Industry Rehabilitation Law—in order to make Kito a wholly-owned subsidiary of Carlyle.

Under the terms of the Stock Swap Agreement dated September 8, 2003, all shareholders (excluding Carlyle) listed in Kito’s shareholder register (including beneficial shareholders) as of October 31, 2003 (the day prior to the effective date of the stock swap) shall receive a cash amount of ¥267 per share. This amount is based on the opinion of Sumitomo Mitsui Banking Corporation regarding the value of Kito shares.

The terms of the stock swap or the Stock Swap Agreement may be varied—based on negotiations between Carlyle and Kito—in the event of a significant change to the financial health of either company.

Kito shall pay shareholders or registered ledges listed in Kito’s shareholder register as of September 30, 2003 an interim dividend of ¥3 per share up to a maximum of ¥63,660,696.

Kito shares will be delisted from the JASDAQ market after Kito becomes a wholly-owned subsidiary of Carlyle. Carlyle does not intend to apply for a new listing.

The Stock Swap Agreement shall be rendered invalid in the event that it is not approved by the general meeting of Carlyle shareholders that is scheduled for September 24, 2003 or in the event that Kito shareholders holding at least one-sixth of all Kito shareholder voting rights notify Kito of their opposition to the stock swap in accordance with Article 12-4-3 of the Revised Industrial Rehabilitation Law and Article 358-5 of the Commercial Code.

At the September 8, 2003 meeting of its Board of Directors, Kito voted to retire its treasury stock in accordance with Article 212-1 of the Commercial Code. 406,969 shares of common stock (1.88% of all outstanding shares) are to be retired at a total amount of ¥78,673,339.

# # #