Capital Alliances Between euglena Co., Ltd. and Five Business Partners

News Release


May 19, 2017


Capital Alliances Between euglena Co., Ltd.
and Five Business Partners
- Strengthening Partnerships in Business and Research & Development for the Further Promotion of the
Energy/Environmental and Healthcare Businesses of euglena Co., Ltd.

euglena Co., Ltd.
Kobashi Kogyo Co., Ltd.
Chiyoda Corporation
API Co., Ltd.
Isuzu Motors Limited
ITOCHU ENEX CO., LTD.

euglena Co., Ltd. (“euglena Co.”, headquartered in Minato-ku, Tokyo; Mitsuru Izumo, President)
announces the implementation of a capital increase of 1.1 billion yen in total through a third-party allotment
to Kobashi Kogyo Co., Ltd. (“Kobashi Kogyo”, headquartered in Okayama-shi, Okayama-ken; Shojiro
Kobashi, CEO), Chiyoda Corporation (“Chiyoda”, headquartered in Yokohama-shi, Kanagawa-ken; Keiichi
Nakagaki, Senior Executive Vice President (Acting President & CEO)), API Co., Ltd. (“API”, headquartered
in Gifu-shi, Gifu-ken; Takahiko Nonogaki, President), Isuzu Motors Limited (“Isuzu Motors”, headquartered
in Shinagawa-ku, Tokyo; Masanori Katayama, President and Representative Director) and ITOCHU ENEX
CO., LTD. (“ITOCHU ENEX”, headquartered in Minato-ku, Tokyo; Kenji Okada, Representative Director,
President and CEO) as scheduled recipients of the share allocation (collectively, the Five Scheduled
Subscribers).


euglena Co. has been pursuing technological development and business expansion while building
partnerships with a number of firms and universities since it achieved the first worldwide large-scale
outdoor cultivation of euglena in December 2005. The Five Scheduled Subscribers offering subscription to
the third-party allotment are comprised of the business partners that started or strengthened their
collaboration in the energy/environmental businesses and healthcare business of euglena Co. after the
company listed its shares on the Mothers Section of the Tokyo Stock Exchange in 2012. The Five
Scheduled Subscribers and euglena Co.’s goal of achieving joint cooperation is evidenced by their
formation of a capital alliance through a third party allotment. Through the capital alliance, euglena Co. and
the Five Scheduled Subscribers will work together in business and in research and development to
advance initiatives for the practical application of the renewable jet fuel and diesel fuel that euglena Co.
has been developing. They will also work on future commercialization of biofuels, while strengthening the
ability to design and develop health products that use microalgae Euglena and expand the product lineup.
 The joint projects among euglena Co. and the Five Scheduled Subscribers including past and future
projects are as follows.
Kobashi Kogyo In September 2014, Kobashi Kogyo concluded a joint research and development
contract with euglena Co. for efficient and stable methods to cultivate useful
microalgae and to pursue joint research with an eye on the establishment of
methods to construct facilities using paddy field creation techniques for the
cultivation of euglena for fuels, and for the mitigation of construction costs. Kobashi
Kogyo plans to promote joint research with the aim of reducing production costs for
Euglena for use in fuels while undertaking initiatives for increases in scale and trial
operations of paddy field-type cultivation facilities.
Chiyoda As one of the business partners in the project to domestically produce and supply
renewable jet and diesel fuels, Chiyoda has been jointly engaging in a series of
preparatory tasks with euglena Co. for a demonstration plant for the production of
renewable jet and diesel fuels (the “Demonstration Plant”), including the selection
of technologies to be adopted for the Demonstration Plant, fundamental design and
construction, and notifications and applications to relevant authorities and
organizations. In February 2017, it concluded a contract for the construction of the
Demonstration Plant with euglena Co. In the future, Chiyoda plans to build the
Demonstration Plant with a scheduled starting date in June 2017, final completion
in October 2018, and operational start in the first half of 2019.
API API has been entrusted with the manufacture and processing of euglena Co.’s final
products (both own branded and OEM branded) of health products that use
microalgae, which started before euglena Co. listed its shares on the Mothers
Section of the Tokyo Stock Exchange. API has also been developing new products
by leveraging the knowledge of both companies. It plans to continue with the
manufacture and processing of Euglena products and strengthening product
development capabilities by further deepening its collaboration.
Isuzu Motors In June 2014, Isuzu Motors concluded a joint research contract for renewable
diesel fuel derived from Euglena and has been promoting the DeuSEL® Project
jointly with euglena Co. The objective of this project is to promote the next
generation renewable diesel fuels. In addition, Isuzu Motors is one of the business
partners in the project that domestically produce and supply renewable jet and
diesel fuels. Isuzu plans to consider ways to evaluate and use the output from the
Demonstration Plant with the objective of achieving road trials using next
generation renewable diesel fuels.
ITOCHU ENEX In November 2015, ITOCHU ENEX, as one of the business partners in the project
that domestically produces and supplies renewable jet and diesel fuels, concluded
a memorandum with euglena Co. for the supply of feedstock for renewable fuels to
be used at the Demonstration Plant. Accordingly, ITOCHU ENEX has been
 considering the procurement of feedstock for renewable fuels to be used in the
Demonstration Plant, other than microalgae, and engaging in discussions about
matters regarding supply and demand, the distribution and sale of renewable fuels
produced at the Demonstration Plant. ITOCHU ENEX will conduct further
discussions and investigations and start the procurement, supply, use of feedstock
for renewable fuels, other than microalgae, and the study of the sale of fuels
produced by the Demonstration Plant with an eye to start operations in the first half
of 2019.


Comments from each of the above companies on capital alliances by way of third-party allotment are as
follows:


euglena Co. (Mr. Izumo, President):
“We are very happy, through the third-party allotment, that the business partners with whom we had been
on friendly terms have become the new peers of euglena Co. in the form of a capital alliance. We have a
good track record in research and development and business promotion in open innovation in collaboration
with those who share our vision. By putting diverse forms of collaboration into practice with the five
companies offering a subscription to the new share issue, we intend to follow through with every endeavor
to achieve our goal of making people and the Earth healthy.


Kobashi Kogyo (Mr. Shojiro Kobashi, CEO):
“Since 2014, Kobashi Kogyou has been conducting research jointly with euglena Co. based on the idea
that our paddy field creation techniques may be used for the cultivation of microalgae. We decided to
subscribe to the share allotment in order to explore new possibilities of agricultural techniques in Japan by
further promoting collaboration with euglena Co., because euglena is used not only for food but in
cosmetics and fuels.”


Chiyoda (Mr. Keiichi Nakagaki, Senior Executive Vice President (Acting President & CEO)):
“In February 2017, Chiyoda concluded a construction contract with euglena Co., as one of the business
partners in the project that domestically produces and supplies renewable jet and diesel fuels. It is our
responsibility to design and construct Japan’s first demonstration and refining plant for renewable jet and
diesel fuels. We will proceed steadily with the construction work, not only as a business partner but also
as an equity alliance partner, with the aim of launching renewable fuel production by the first half of 2019.
We hope to work with a number of people on the examinations and considerations of future product
commercialization.”


API (Mr. Takahiko Nonogaki, President):
“API manufactures and processes health foods and medical products under contract. Since before 2012,
we have been entrusted by euglena Co. with the manufacture and processing of euglena Co.’s health
products. Through the subscription to the new share allotment, we hope to strengthen product development
capabilities at API and euglena Co. by benefiting from the experience and know-how of both companies.”


Isuzu Motors (Mr. Masanori Katayama, President and Representative Director):
“Isuzu Motors started to develop renewable diesel fuels jointly with euglena Co. in the DeuSEL® Project
announced in June 2014, and has been pursuing relevant initiatives based on the project to domestically
produce and supply renewable jet and diesel fuels. Taking advantage of the capital alliance, we hope to
accelerate the initiatives for the promotion and adoption of next generation bio diesel fuels jointly with
euglena Co.”


ITOCHU ENEX (Mr. Okada, Representative Director, President and CEO):
“ITOCHU ENEX has been considering the procurement of feedstock for renewable fuels other than
microalgae jointly with euglena Co. as one of the partners in the project that domestically produces and
supplies renewable jet and diesel fuels. Through the subscription to the new share issuance for capital
increase, we hope to build closer relationships with euglena Co., accelerate initiatives for the practical
application of renewable jet and diesel fuels and the future commercialization, and to contribute to a low
carbon society as an energy company.”


In cooperation with a variety of partners, including the Five Scheduled Subscribers, and relevant authorities
and organizations, euglena Co. will steadily push forward with endeavors to achieve consolidated net sales
of 30 billion yen by the fiscal year ending September 2020, as stated in the Medium-Term Management
Plan, and the practical application of domestically produced renewable jet and diesel fuels.