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Ichigo Asset Management Takes 10.96% Stake in Steel Maker Tokyo Kohtetsu, Seeks Dialogue with Management to Remedy Poor Terms for Shareholders in Proposed Share Exchange

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[Tokyo, January 15, 2007] Ichigo Asset Management International, Pte. Ltd., (“Ichigo”) filed a Large Shareholder report in Japan today, stating that it has acquired a 10.96 percent holding in steel maker Tokyo Kohtetsu Co., Ltd. (JASDAQ 5448) (“Tokyo Kohtetsu”). Ichigo intends to seek a dialogue with company management to remedy poor terms for shareholders in a proposed share exchange.

On October 26, 2006, Tokyo Kohtetsu and Osaka Steel Co., Ltd. (Tokyo, Osaka 5449) (“Osaka Steel”) announced an agreement whereby Tokyo Kohtetsu will become a wholly owned subsidiary of Osaka Steel through a share exchange. Tokyo Kohtetsu is planning to hold an Extraordinary General Meeting of Shareholders on February 22, 2007 to ask for approval of the share exchange agreement, which needs a two thirds approval and 50 percent voting participation (quorum) from shareholders.

Ichigo has high regard for Tokyo Kohtetsu’s business success, profitability, and significant financial strength. Ichigo also respects management’s decision to become a wholly owned subsidiary of Osaka Steel, recognizing that the business integration is projected to generate extremely large earnings synergies, equivalent to about 50 percent of Tokyo Kohtetsu’s existing earnings.

However, Ichigo believes that the proposed share exchange fails to fully reflect the value of Tokyo Kohtetsu, and is concerned that minority shareholders’ interests have not been fully taken into consideration. The existing share exchange agreement proposes that a shareholder of Tokyo Kohtetsu will be allotted 0.228 shares of Osaka Steel for each one share of Tokyo Kohtetsu. According to Ichigo’s calculation, Osaka Steel is thus offering Tokyo Kohtetsu’s shareholders a premium of 0.3 percent relative to the one-month average share price prior to the announcement date or a 5.8 percent premium relative to the announcement date closing price.

Given that Tokyo Kohtetsu generates among the highest operating margins and return on equity in the Japanese steel industry, Ichigo believes that there is significant upside potential for Tokyo Kohtetsu’s share price well beyond the proposed share exchange offer. Ichigo believes that there are four reasons why the proposed share exchange offer does not fully reflect the value of Tokyo Kohtetsu:

1) the improvement of Tokyo Kohtetsu’s business performance that was not factored in
by the proposed share exchange;
2) the value of Osaka Steel’s full management rights over Tokyo Kohtetsu (the so-called “control premium”);
3) the superior earnings yield of Tokyo Kohtetsu relative to Osaka Steel --- Tokyo Kohtetsu’s forecast fiscal 2006 earnings yield of 16% is far higher than that of Osaka Steel’s 10%, resulting in substantial earnings accretion to Osaka Steel;
4) the massive additional earnings synergies from combining Tokyo Kohtetsu’s and Osaka Steel’s businesses.

Ichigo thus considers that a fair offer to Tokyo Kohtetsu’s shareholders should be at least a 30 percent premium to the one-month average share price ratio prior to the agreement announcement date, or 0.295 Osaka Steel shares for one Tokyo Kohtetsu share. Ichigo intends to pursue discussions with the management of both Tokyo Kohtetsu and Osaka Steel in order to achieve this more equitable outcome for all Tokyo Kohtetsu shareholders.

With respect to Tokyo Kohtetsu’s announcement date share price itself, Ichigo is concerned that Tokyo Kohtetsu did not release an upward revision to its fiscal 2006 half-year earnings guidance until the time of its share exchange agreement. Tokyo Kohtetsu’s 32% upward revision to earnings guidance for the already completed first half of fiscal 2006 could very well have had a positive impact on Tokyo Kohtetsu’s share price. For the benefit of Tokyo Kohtetsu’s shareholders, Ichigo believes that Tokyo Kohtetsu’s improved business performance should have been reflected in the share price for the share exchange ratio calculation.

Scott Callon, Partner and Chief Executive Officer of Ichigo’s Japan-based investment advisor, Ichigo Asset Management, Ltd., comments: “Ichigo invests in smaller companies it believes have been significantly undervalued by the capital markets. Together with the management of the companies in which it invests, Ichigo respects and seeks to contribute to the success of all stakeholders, including shareholders, employees, customers, and communities. In accordance with this vision, and to support the business integration of Tokyo Kohtetsu and Osaka Steel, Ichigo seeks that the shareholders of Tokyo Kohtetsu, including over 1,000 individual investors, be offered an appropriate price which reflects the true value of Tokyo Kohtetsu.”

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For further information, please contact:
Gavin Anderson & Company: Hayden/Hattori/Higashi +81-3-5404-0640

Notes to editors:

Ichigo is an independent asset manager specializing in Japanese equities. Ichigo believes good corporate governance lies at the heart of strong company performance, and is seeking a new model for Japanese corporate governance that includes active, committed, and responsible shareholders. Ichigo’s Japan-based investment advisor, Ichigo Asset Management, Ltd., provides investment advice, and its Singapore-based fund manager, Ichigo Asset Management International, Pte. Ltd., undertakes investments.

For further information, please visit the website: http://www.ichigoasset.com/