Carlyle to Launch a Tender Offer for Shares of Kito Corp.

Tokyo, Japan – Global private equity firm The Carlyle Group today announced that they will launch a tender offer during the period of July 18 through August 27, 2003, with a view to acquiring all common stock of JASDAQ-listed Kito Corp. The offer price represents a 25.9% premium over the average (JASDAQ) closing price (JPY 214.4 per share) during the three-month period ending July 16, 2003.

The purchase target is 14,426,000 shares (66.7% of all outstanding shares). At present, the Carlyle Group does not—either directly or indirectly—hold any Kito shares. However, since there is no upper limit for the number of shares to be acquired by Carlyle in this tender offer, the bid may result in the delisting of Kito from the JASDAQ market. Such an outcome would provide Kito's management team with an increased level of involvement in company operations, as Carlyle Japan professionals work closely with the existing management of the invested companies in a “management-buyout” approach. The Carlyle Group has obtained approval for this tender offer from Kito's Board of Directors. The agent for the tender offer is Nomura Securities Co., Ltd.

Kito Corp., the leading Japanese manufacturer of hoists and cranes in Japan, has faced a difficult operating environment due to the impact of the prolonged Japanese recession on private-sector capital spending and a shift from domestic to overseas production. The company has responded to this challenging climate by undertaking a number of reforms, some of which are already beginning to bear fruit. However, Kito's business strategy has until now relied on continuous macroeconomic growth, such that the current downturn has left it saddled with excessive interest-bearing debt and the legacy of excessive capital spending. The company recognizes that in order to break this stalemate and create a solid foundation for future growth in the face of ongoing economic stagnation and intensifying market competition, it will need to develop greater management control, accelerate the globalization of its operations, strengthen its marketing capabilities, and bolster its financial resources.

By following Carlyle's investment strategies and streamlining its shareholder base, Kito intends to establish a platform for swift decision making, improve its capital efficiency through measures to strengthen financial management such as tighter controls over inventory and working capital, and expand its product lineup by developing new products in collaboration with strategic partners. The company's currently-unprofitable logistics systems division will be restructured with a view to bringing it back into the black.

The Carlyle Group is now in the process of obtaining an approval from Ministry of Economy, Trade and Industry under the Revised Industry Rehabilitation Law to enable the firm to initiate a cash for stock exchange (following the TOB process), which is one of the integral part of the entire transaction process.

# # #