Clearing insolvency with a third-party share issue to Sojitz (2007)

Eighteen years from 28.3% to the exit

What this share issue moved was not the sum of ¥999.99m but the question of who would decide the capital structure that came after. Priced at ¥78,628 a share — cut to the single yen so that the total stopped just short of ¥1bn — the stake settled at 28.3%, near the bottom of the range indicated in the basic agreement. Far from a majority, and yet SAKURA internet became an equity-method affiliate of Sojitz and took one director from it. What Sojitz brought was not only money but a general trading house’s customer network and a sales channel for ASP and SaaS services. For the hole that was filled, the company gained one more party to whom it had to explain what it intended to grow.

The years in which that stake rose, however, were also the years in which the company grew most. In March 2011, through a tender offer and a shareholders’ agreement, Sojitz became the parent; by the end of the year to March 2016 it held 40.29%. In between, the Ishikari data center opened and added its second and third buildings, and in November 2015 the company moved from Mothers to the First Section of the TSE. A hole filled from outside with capital can only be filled back with capital. It took eighteen years for the trading house that came in at 28.3% to step out of the shareholding, and across all of it Tanaka Kunihiro never left the president’s chair. Deciding whom to admit as a shareholder in order to survive an emergency binds the capital structure long after the business has recovered.