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Business alliance between Swing Corporation and Sekisui Chemical Co., Ltd. in the water business
Jun 10, 2011

Swing Corporation
SEKISUI CHEMICAL CO., LTD
- To be competitive with water giants by organizing a one stop comprehensive system for water treatment facilities and pipes -

Swing Corporation (President: Masayoshi Hirose) (hereinafter referred to as Swing) and Sekisui Chemical Co., Ltd. (President: Naofumi Negishi) (hereinafter referred to as Sekisui Chemical) have reached to an agreement, to have business alliance in the areas of design, construction, operation, maintenance and management of related facilities and pipes for water supply and sewerage systems in order to fulfill requirement from customers. A target of this alliance is to provide one stop solution for the management of water-related facilities and pipes in Japan as well as overseas market.

We aim to bring together Swing's know-how in EPC works (Engineering, Procurement and Construction: design and construction of water treatment facilities) and O&M (Operation and Maintenance) in the water treatment business accumulated over the years, and Sekisui Chemical's ability to offer value chains in the pipe business (investigation, diagnosis, design, supply of products, installation, maintenance and management) in order to further enhance the competitive advantage of the two companies and to expand their water business in Japan and overseas.

1. Background

Local governments in Japan are facing difficulty in maintaining water supply and sewage treatment services due to (i) Huge financial burden caused by the maintenance and renewal of aged facilities and pipelines, and (ii) Limited human resources. In emerging and developing countries where both funds and personnel are scarce, construction of water supply and sewerage infrastructure is in demand. To solve these issues, utilization of know-how, personnel and funds in the private sector has being activated such as, increasing the number of PPP (Public Private Partnership) projects.

Meanwhile, in the global water market, French and British water giants have huge shares in PPP backed by their accumulated know-how in design, construction, operation, maintenance and management of water treatment facilities as well as in business operations and fee collection in one line. For both Swing and Sekisui Chemical, they have been seeking a partner in order to fulfill the value chain (equipment supply, design, construction, operation, maintenance and management, customer service and business operation), which is the essential condition to enter the market.

2. Aim of the business alliance

We aim to combine the knowledge of EPC, O&M, and PPP in the water treatment business that Swing has accumulated in Japan and overseas, with Sekisui Chemical's expertise in offering a value chain in water pipe business (particularly in pipe stock management) in order to provide one stop solution for the management and operation of water-related facilities and pipes to maintain water infrastructure in safe manner. As a one-stop solution provider, we will strengthen this role, not only for the market in Japan, but also for overseas market including coming PPP projects as well.

3. Details of the business alliance

Swing and Sekisui Chemical will jointly promote business as follows in the areas of design, construction, maintenance and management of water supply and sewerage pipes and water treatment facilities.

1)Sales activities aiming to secure compound consignment projects (pipe work and a processing facility are combined and outsourced) in Japan and overseas
2)Completion of the projects secured through the sales activities
3)Establishment and operation of an SPC (special purpose company) when required for order placement

The roles of each company in promoting the above are as follows.

<Swing's role>

All aspects of the business that contribute to secure comprehensive orders for water treatment facilities

(1)Investigation and diagnosis of water treatment facilities
(2)Design and consulting service for water treatment facilities
(3)Preparation of long-term repair plan and upgrade plan for water treatment facilities
(4)Upgrading and new construction of water treatment facilities
(5)Operation, maintenance and inspection of water treatment facilities, and water quality analysis
(6)Sale of equipment and chemicals for water treatment facilities
(7)Overall operation and management of water treatment facilities

<Sekisui Chemical's role>

All aspects of the business that contribute to securing comprehensive orders for pipes

(1)Investigation and diagnosis of pipes (diagnosis of aging, deteriorating and leaking pipes)
(2)Preparation of maintenance and management plans, and long-term plans for pipes
(3)Design work to renew, update, and newly lay pipes
(4)Building work to renew, update, and newly lay pipes
(5)Maintenance and management of pipelines (operations such as daily inspection and cleaning services)
(6)Supply of materials and equipment for pipes
(7)Supply of pipe management systems and their operation

4. Business objectives

Joint sales activities and joint order-taking activities commence in May 2011. We aim to have sales exceeding 50 billion yen (sales of two companies combined) in five years in 2016.

[Reference]

<Overview of Swing Corporation>


1)Head Office11-1, Haneda Asahi-cho, Ohta-ku, Tokyo, Japan
2)RepresentativeMasayoshi Hirose, President and Representative Director
3)Date of incorporationApril 1977
4)Paid-up capital650 million yen
5)Business description(1)Design, construction, operation, maintenance and management of water treatment facilities (water supply, sewerage, sludge treatment, industrial water)
(2)Manufacturing and sale of water treatment chemicals
6)Sales67.9 billion yen (in the term ending March 2011)
7)Number of employees2,978 (in the term ending March 31, 2011)

<Overview of Sekisui Chemical Co., Ltd>

1)Head Office Osaka Head Office: 2-4-4 Nishitenma, Kita-ku, Osaka
Tokyo Head Office: 2-3-17 Toranomon, Minato-ku, Tokyo
2)RepresentativeNaofumi Negishi, President and Representative Director
3)Date of incorporationMarch 1947
4)Paid-up capital100 billion yen
5)Business description(1)Manufacturing and sale of materials for water supply and sewerage systems, housing materials, and functional materials
(2)Manufacturing and sale of high-performance plastics for automotive materials, IT-related materials, and for the medical products
(3)Manufacturing and sale of modular houses, and renovation of houses
6)Sales915.4 billion yen (in the term ending March 2011, on a consolidated basis)
7)Number of employees19,770 (in the term ending March 2011, on a consolidated basis)


Press Contact

Swing Corporation
Management Planning and Supervision Department
+81-3-6275-9495

Sekisui Chemical Co., Ltd.
Corporate Communication Department, Public Relations Group
Fax: +81-3-5521-0510

Disclaimer

This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.
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