News | AUTOBACS SEVEN

February 5, 2009

Notice of applications for bankruptcy proceedings of the U.S. based consolidated subsidiaries and the possibility of failure or delay of debt collections

AUTOBACS SEVEN Co., Ltd.
(Translation of major points of Japanese release)
February 5, 2009 (Tokyo, Japan) — AUTOBACS SEVEN Co., Ltd. (“the Company,” Representative Director and CEO: Setsuo Wakuda), announced that each board of directors of the Company’s two consolidated subsidiaries, AUTOBACS STRAUSS INC. and AUTOBACS U.S.A., INC resolved to file Chapter 11 petitions and the two subsidiaries filed petitions under Chapter 11 of the U.S. Bankruptcy Code on February 4, 2009 (EST and PST) with the United States Bankruptcy Courts of each district. This may result in a failure or delay of debt collections by the Company of its loans to the two subsidiaries as stated in the following.
1. Overview of the bankrupting subsidiaries (as of the end of December, 2008)
1) AUTOBACS STRAUSS INC.
①Company Name : AUTOBACS STRAUSS INC.
②Location of Head Office : 2711 Centerville Road, Suite 400, Wilmington, New Castle, DE 19808, U.S.A.
③Representative : Akihiro Yamada, Chief Executive Officer
④Capital : JPY 32.3million
⑤Net Asset : JPY 3.3million
⑥Total Asset : JPY 75.8million
⑦Major Shareholder : AUTOBACS U.S.A., INC.: 100% (AUTOBACS U.S.A., INC. is a wholly-owned subsidiary of AUTOBACS SEVEN CO., LTD.)
⑧Number of Stores : 86
⑨Principal Business : Retail of automotive parts and accessories
⑩Recent Performance : (million US dollars)

	FY ended Dec 2007 (approx. 9 month) Mar.8/07 through Dec.31/07	FY ended Dec 2008 Jan.1/08 through Dec.31/08
Net sales	96.2	150.1
Operating income	-10.9	-21.5
Net income	-11.3	-17.5

2. Backgrounds of the petition filings
AUTOBACS U.S.A., Inc. was incorporated in May 2001 and opened its first store “SUPER AUTOBACS BEACH&22“ in August 2003. AUTOBACS STRAUSS INC. was incorporated in March 2007, and acquired and started business of 89 stores and the distribution center of STRAUSS Discount AUTO in May 2007.
The Company has invested abundant Company resources, including operational know-how, technology, personnel, besides capital investment, and both subsidiaries have made continuous operational efforts eagerly. However, operation of both businesses has become more challenging under the weakening U.S. economy combined with the sub-prime crisis and the deteriorating automobile industry. Ultimately due to the lack of funding, the subsidiaries considered it not possible to continue operations and have decided to file bankruptcy petitions under Chapter 11 in order to reorganize and/or dispose of assets, claims and debts of the subsidiaries under court supervision.
3. Total Amount of Debt
1) AUTOBACS STRAUSS INC.
US$ 72.4million (as of the end of Dec. 2008; includes US$ 40.2million borrowed from the Company)
2) AUTOBACS U.S.A., INC.
US$ 3.8million (as of the end of Dec. 2008; includes US$ 2.8million borrowed from the Company)
4. Types and amounts of the Credits (as of the end of Dec. 2008)

1) AUTOBACS STRAUSS INC.

	Loan	Other receivables	Total	Ratio to net assets of the Company*2)
Receivables (in thousand US$)	40,250	2,145	42,395	2.3%
Amount converted into Yen (in million)	3,663	195	3,859	2.3%

(2) AUTOBACS U.S.A., INC.

	Loan	Other receivables	Total	Ratio to net assets of the Company*2)
Receivables (in thousand US$)	2,800	131	2,931	0.2%
Amount converted into Yen (in million)	254	11	266	0.2%

*1) The exchange rate was applied at mid rate of Bank of Tokyo Mitsubishi UFJ Ltd. on 30th December, which was 91.03/US$.
*2) This indicates the percentage of the amount of the receivables which are converted into yen to the Company’s non-consolidated net assets of JPY 168,750million (as of Sep.30, 2008)
*3) The amounts above do not include the amounts which were guaranteed by the Company for (i) contingency liability of acceptance and guarantee of AUTOBACS STRAUSS INC.to the bank which amounted up to US $1.4million and (ii) liability for property lease agreement for SUPER AUTOBACS BEACH&22 STORE (including approximately US$ 1.0million of the total amount of the remaining rent).
5. Influence on the Company’s business results
The effects on the Company’s business results are now being examined and will be announced as soon as they are fixed. For reference, the total amount of the Company’s assets that is at risk of being damaged is described in the table below.

Balance of investments and advances to the U.S. business (as of the end of 2008)

	Balance of Investments and advances to the U.S. business (million yen)
	Consolidated basis	Non-consolidated basis
AUTOBACS STRAUSS INC.	4,110	7,447
AUTOBACS U.S.A., INC.	387	725
U.S.A. Total	4,497	8,173