Kaname Capital Announces Further Opposition to PROTO Corporation MBO and Introduces Statement by Former Employee

Associated Press

10-03-2025

Kaname Capital ('We,' 'Our,' 'Us') submitted an open letter on February 18 th with eight questions of concern regarding the MBO announced by PROTO Corporation ('PROTO Corporation' or 'the Company') by its founder, Chairman Yokoyama. In the spirit of 'fair disclosure,' we requested PROTO Corporation publish its response to our questions by 5 p.m. on February 28. Although a response was sent directly to us by the deadline, we have not publicly confirmed the Company's reply until today. 1
Despite our intention to make any new information contained on the Company's reply to our open letter available to all shareholders, the company decided that 'fair disclosure' allowed them to base their answers solely on previously disclosed materials, thereby actively avoiding addressing our concerns around the motives, process and price of the MBO. In an ironic twist, we were also requested by PROTO Corporation to keep their response to us private. The Company has chosen two ways to thwart the real meaning of 'fair disclosure.' This compels us to act.
Our open letter and request for the response to be made in public forum by the 28 th was designed to honor our understanding of 'fair disclosure;' a responsibility to make the Company's response and any new information available to all at the same time. However, considering the conditions imposed on us by the Company, we have decided, despite the Company's twisted logic, not to make their response public in accordance with their wishes.
Frustrated by the lack of engagement with our questions in the Company's boilerplate response, we requested an opportunity to directly discuss our concerns about the MBO with the Special Committee. However, the Special Committee demanded that we submit a written statement detailing our questions 15 hours prior to the Company notifying us of any meeting date (at noon two business days prior to the meeting date) and stated that they could only answer any questions based on the contents of documents that had already been disclosed. Despite the obligation of the Special Committee to serve in the interest of all shareholders, by refusing substantive dialogue with us, the largest minority interest shareholder, the Special Committee have revealed their intent to protect Chairman Yokoyama's motives, conflicts and price above the interests of all other shareholders.
Moreover, since the release of our February 18 th open letter, we have received numerous messages of support for our position, as well as concerns about the MBO and worries about the future of the company from employees, former employees, individual shareholders, and institutional investors. Through these communications we are even more resolved to oppose Chairman Yokoyama's MBO, making it our mission as the largest minority shareholder to represent the voices of those who find it difficult to speak up directly to the Special Committee and the Board of Directors.
Among the rising voices of concern, we were contacted by a former employee (hereinafter 'the former employee') who engaged in fictitious transactions at PROTO Corporation which came to light last year. After our independent legal representative interviewed the former employee about the background to the fictitious transactions, he detailed how he was driven to develop the scheme due to 'strong pressure to achieve sales targets.' The former employee explained to the Special Investigative Committee that his motivation was to meet what he felt were arbitrary and unreasonable sales goals. But since the Special Investigative Committee's report did not address Chairman Yokoyama's influence as the root cause of the sales pressure culture, the accuracy of the report should be questioned in relation to this MBO.
The former employee, reflecting on his own experience of engaging in fictitious transactions fears that this MBO will strengthen Chairman Yokoyama's authoritarian management and take PROTO Corporation in an even worse direction. The former employee wishes to share his concerns with a wide range of stakeholders, and as we also believe it is meaningful to do so, we have decided to publish the former employee's statement here. To ensure neutrality and anonymity, this statement was prepared by an independent lawyer who verified the identity of the employee, interviewed him, and prepared the statement attached.
PDF Link Here
Based on this statement and the many other opinions we have received; we believe that this MBO is being carried out solely for the personal motives of Chairman Yokoyama. In our view, there are many better alternatives to an MBO, including 1) carrying out fundamental management reforms while maintaining the company's public listing, 2) find the best owner for the business by entertaining other bids, or 3) privatize the company in cooperation with private equity. Each of these scenarios represents a better path to sustainable corporate value creation. We sincerely hope that the Special Committee and the Board of Directors will seriously consider these possibilities and engage in substantive discussions with us, the largest minority shareholder.
We continue to solicit opinions and other comments on this MBO. Please contact us: [email protected] (anonymous comments are acceptable).
1 This translation is provided for informational purposes only. The original text in Japanese is the authoritative version.
SOURCE: Kaname Capital LP
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