TRIS Rating Affirms Company Rating of “EASY BUY” at “BBB/Negative”and Downgrades Issue Ratings to “A+” from “AA-” with “Negative” Outlook

TRIS Rating Co., Ltd. has downgraded the ratings of guaranteed debentures of EASY BUY PLC (EASY BUY) to “A+” from “AA-”. At the same time, TRIS Rating has affirmed the company rating of EASY BUY at “BBB”. The outlooks for both company and issue ratings are “negative”. The downgraded issue ratings reflect the weaker financial profile of ACOM Co., Ltd., EASY BUY’s parent company and the guarantor of the debentures. ACOM’s financial performance is expected to be pressured by higher provisioning expenses for both possible loan losses and refunds of overpaid interests, the full implementation of new “Money Lending Business Law” in June 2010 in Japan, and the worsening business environment in Japan.

The issue ratings also reflect a full guarantee by ACOM, which is rated “Baa3” with a “negative” outlook by Moody’s Investors Service (Moody’s) and “BBB” with a “negative” outlook by Standard & Poor’s (S&P). The ratings of ACOM are supported by its strong market position in the consumer finance business, a sound and experienced management team, more diversified businesses, and strong alliance with Mitsubishi-UFJ Financial Group Inc. (MUFG). MUFG currently holds a 40.04% stake in ACOM and has included ACOM as its consolidated subsidiary since 25 December 2008. These strengths are constrained by a fiercely competitive environment and regulatory risk, which negatively affect the performance of non-bank consumer finance companies in Japan.

The “negative” outlooks for the issue ratings reflect the remained uncertainty of financial performance of ACOM, the guarantor of EASY BUY, in FY2010, which was highly pressured by higher provisioning expenses for both possible loan losses and refunds of overpaid interests.

TRIS Rating reported that under the guarantee agreement, which is governed by the Japanese laws, the guarantor irrevocably and unconditionally guarantees to promptly make full payments of obligations of the rated debentures in the event that EASY BUY does not pay. The guarantee’s obligations will be reinstated if the payments made by EASY BUY are recaptured as a result of the issuer filing bankruptcy. Furthermore, if there is any merger or consolidation of ACOM, the successor of ACOM shall assume these guaranteed obligations. If the guarantor fails to pay the amount due after receiving notice, the debentureholders’ representative can commence legal action against the guarantor in the commercial court, in Japan, for the defaulted amount. The obligations of the guarantor under this guarantee agreement rank equally with other unsecured and unsubordinated debts of the guarantor.

ACOM reported net losses totaling 7 billion yen in FY2009 (ending March 2010), reversing sharply from net profit of 14 billion yen in FY2008 (ending March 2009) and 35 billion yen in FY2007 (ending March 2008). The company’s net loss was derived mainly from the additional provisions for losses related to refunds of overpaid interest and extraordinary losses related to management reforms. However, the company’s capitalization remained strong. The shareholders’ equity to total loans increased from 25.98% in FY2006 (ending March 2007) to 34.52% in FY2009 (ending March 2010). This was due mainly to the decline in the company’s outstanding loan.

As of March 2010, the loan receivables of EASY BUY made up 5.4% of ACOM’s consolidated receivables, up from 4.3% at the end of FY2008 (ending March 2009). The amount of EASY BUY’s liabilities guaranteed by ACOM totalled 57,658 million yen as of March 2010, representing 13% of ACOM’s total shareholders’ equity, on par with FY2008 data. EASY BUY is ACOM’s first overseas subsidiary in Southeast Asia, and figures significantly in ACOM’s strategy to be a major regional player in the consumer finance industry. ACOM has shown a strong commitment to EASY BUY, providing financial and business support by passing along technology and business practice know-how, as well as developing new products for the Thai market, said TRIS Rating. -- End

Company Rating: Affirmed at BBB Rating Outlook: Negative Issue Ratings: EB108A: Bt320 million guaranteed debentures due 2010 Downgraded to A+ from AA- EB108B: Bt100 million guaranteed debentures due 2010 Downgraded to A+ from AA- EB128A: Bt125 million guaranteed debentures due 2012 Downgraded to A+ from AA- EB128B: Bt2,710 million guaranteed debentures due 2012 Downgraded to A+ from AA- EB128C: Bt3,500 million guaranteed debentures due 2012 Downgraded to A+ from AA- EB133A: Bt1,000 million guaranteed debentures due 2013 Downgraded to A+ from AA- Rating Outlook: Negative Copyright 2010 TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.