OREANDA-NEWS. Cosmo Oil Co., Ltd. resolved at its Board of Directors meeting held today to incorporate Cosmo Energy Holdings Co., Ltd. as a pure holding company (wholly-owning parent company) through a share transfer to be solely conducted by the Company (hereinafter the "Share Transfer"), and to implement a group reorganization aimed at the transformation to a group structure comprised of three core operating companies under the Holding Company, as described below.

The Company has prepared to make the transformation to a holding company structure based on a resolution of the Board of Directors meeting held on February 5, 2015. As a result, the Company decided to incorporate the Holding Company as of October 1, 2015 (scheduled date) through prescribed procedures such as the approvals of the general shareholders meeting and of the relevant authorities.

In addition, the Company intends to establish a business structure comprised of the Holding Company and three core operating companies after the incorporation of Cosmo Oil Marketing Co., Ltd. through the group reorganization, including the transfer of the Company's marketing-related business by way of an absorption-type company split (which is scheduled for October 1, 2015), and the transfer of its business of managing subsidiaries to the Holding Company by way of absorption-type company split (which is scheduled for January 1, 2016).

Since the Share Transfer is scheduled to be solely conducted by the listed company (the Company), some items and details are partially omitted in this disclosure. Further, details of the group reorganization, scheduled after the incorporation of the Holding Company, will be announced as soon as they are determined.

The business environment surrounding the Cosmo Group is significantly changing, including the drastic fluctuation of crude oil prices, the gradual decrease in domestic demand for oil products, and the expanded introduction of renewable energy. Under these circumstances, companies in the industry are accelerating their movements towards the enhancement of their business portfolios beyond their domestic petroleum businesses and towards reorganization.

Cosmo Group has raised as its business vision the transformation to a "Vertically Integrated Global Energy Company" and is working on thorough streamlining centered on the oil refining and marketing business, and shifting business resources to the businesses of resource development, retail and wind power generation, which are positioned as growth drivers, with the aim of transforming the business portfolio. At the moment, however, our business resources remain biased towards oil refining and marketing businesses and optimal distribution of such resources is a pressing issue.

For Cosmo Group to realize sustainable growth in the future, it is essential to implement optimal distribution of limited business resources and strengthen its competitiveness by business unit, taking a panoramic perspective of the whole group. To accomplish this target, we have determined that it would be effective to undergo a transformation to a holding company structure.

In addition, we believe that the holding company structure, where the "business monitoring function" and the "business execution function" are separated, is the suitable solution from the perspective of the enhancement of corporate governance.