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| September 28, 2006 Kyushu Electric Power Company Inc. |
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Business and Capital Alliance between Kyuden Business Solutions Co., Inc. and RKK Computer Service Co., Ltd.
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| We announce that Kyuden Business Solutions Co., Inc. (hereinafter referred to as QBS) headquartered in Fukuoka, our wholly owned subsidiary specializing in information system business, and RKK Computer Service Co., Ltd. (hereinafter referred to as RKKCS) headquartered in Kumamoto, have mutually agreed on business and capital alliance and have signed an agreement to that effect. With the aim of strengthening its competitive capability, QBS had been negotiating with RKKCS and its parent company, Kumamoto Broadcasting Co., Ltd.(hereinafter referred to as RKK), regarding business and capital alliance. RKKCS has a unique edge in developing information systems for municipalities, and is establishing a nationwide brand as an IT business with a regional enterprise background. With the aim of maximizing the value of the Kyushu Electric Power Group, we are working to improve our capability at outside-the-group sales and to enhance the revenue base of each member company of the group. The business and capital alliance agreed to on this occasion comprises the first effort in the history of our group to enhance our capability at outside-the-group sales through use of business and capital alliance. We hope that this alliance will contribute to further development of the information service industry in the Kyushu region by embodying the expected advantages of this alliance, and strengthening tie-ups with the IT and telecommunications companies in our group. 1. Major Points of the Agreement (1) Acquisition of the right to manage RKKCS through two-step capital injection by QBS * Through its sole investment, QBS will acquire 25% of issued RKKCS stock as the first step (at the end of October 2006) and ultimately 51% of the stock (at the end of May 2007). * RKK will hold 34% (71% currently) of the stock after QBS acquires 51%. (2) Continuation of RKKCS as an independent business company * QBS and RKKCS will respect each other's base of existence. To unify the visions and business strategies of the two companies, however, a "Group Management Council" (provisional name), consisting of the management ranks of the two companies, will be established and will seek further enhancement of competitiveness in different fields, in which each of the two has the edge. (3) Investment scheme * A capital increase through third party allocation by RKKCS (to be underwritten by QBS) 2. Expected Advantages of the Alliance * Increased presence by ensuring a top-class position in the information service industry in the Kyushu region * Enhanced creditworthiness as a result of using not only the Kyuden brand, but also the sales network linked with nationwide power-utility-funded information system subsidiaries, and of the resulting nationwide spread of integrated administrative information systems made for municipalities * Improved technological capability and competitiveness through mutual exchange of human and other resources * Streamlined business activities through joint procurement and sales of equipment and systems, integrated outsourcing, integrated operations of business locations etc. * Expanded business through linkage with the IT and telecommunications companies in Kyushu Electric Power Group. 3. Reference
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