PJF Prospect Japan

TIDMPJF

RNS Number : 6844G

Prospect Co., Ltd.

31 May 2017

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION (INCLUDING THE UNITED STATES) WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

For immediate release

31 May 2017

RECOMMED ALL-SHARE OFFER

for

THE PROSPECT JAPAN FUND LIMITED

by

PROSPECT CO., LTD.

TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT

UNDER PART VIII OF THE COMPANIES LAW OF GUERNSEY

Summary

-- The board of directors of Prospect Co., Ltd. ("Prospect") and the independent directors of The Prospect Japan Fund Limited ("TPJF" or the "Company") are pleased to announce that they have reached agreement on the terms of a recommended share for share exchange offer to be made by Prospect for the entire issued and to be issued share capital of TPJF (the "Offer"). It is intended that the Offer will be implemented by way of a Court-sanctioned scheme of arrangement between TPJF and its shareholders under Part VIII of the Companies Law of Guernsey (the "Scheme").

-- Prospect is a Japanese company listed on the Tokyo Stock Exchange (ticker code: 3528), which owns and operates a number of Japanese and Hawaii based businesses including a real estate developer, a construction company, a house building company, an investment management business and a solar power generation business.

-- The Offer is a share for share exchange offer at a ratio of 2.5 New Prospect Shares in exchange for each TPJF Share (the "Exchange Ratio"). The Exchange Ratio attributes an implied value for the entire issued share capital of TPJF of approximately US$146.6 million (based on the middle market closing price of Yen70.50 per Prospect Share on 30 May 2017, being the last Business Day in Japan prior to the date of this Announcement and using an exchange rate of 111.03 Yen/US$).

-- If successful, the combination of TPJF and Prospect will result in TPJF Shareholders holding approximately 57.6 per cent. of the Combined Group and Prospect Shareholders holding approximately 42.4 per cent. of the Combined Group.

-- At the value implied by the Exchange Ratio, the Offer represents a premium of approximately:

o 67.98 per cent. to the middle market closing price of US$0.945 per TPJF Share on 9 January 2017 (being the last Business Day in London prior to the start of the Offer Period);

o 71.05 per cent. to the volume weighted average price for TPJF Shares of US$0.928 over the three month period ended on and including 9 January 2017 (being the last Business Day in London prior to the start of the Offer Period);

o 45.63 per cent. to the middle market closing price of US$1.09 per TPJF Share on 30 May 2017 (being the last Business Day in London prior to the date of this Announcement); and

o 28.13 per cent. to TPJF's last published NAV per share of US$1.2389 on 26 May 2017*.

Note:

* - This NAV calculation is on the basis that the Company's holding of SARs is valued at par. As set out in the Company's announcement of 26 May 2017, if the SARs were to be 'fair valued' using the Black-Scholes-Merton model, in line with TPJF's annual financial statements, the NAV per share would be US$1.3380. At the value implied by the Exchange Ratio, the Offer would represent a premium of approximately 18.64 per cent. to such alternative NAV per TPJF Share.

-- Prospect is the parent company of both the investment manager and the investment adviser to TPJF, being Prospect Asset Management (Channel Islands) Ltd. ("PAM(CI)") and Prospect Asset Management, Inc. ("PAMI"), respectively. As at the date of this Announcement, neither PAM(CI) nor PAMI is interested in any TPJF Shares.

-- Mr Rupert Evans, a non-executive director of TPJF, is also a non-executive director of PAM(CI) and is therefore not part of the committee of Independent TPJF Directors that was formed to assess the Offer.

-- Implementation of the Scheme will be subject to, amongst other things, the approval of Scheme Shareholders at the Court Meeting and TPJF Shareholders at the TPJF General Meeting, and the sanction of the Scheme by the Court. The Scheme Document, setting out full details of the Scheme and the procedures to be followed by TPJF Shareholders to approve the Scheme, together with the Forms of Proxy, are expected to be despatched to TPJF Shareholders as soon as reasonably practicable. It is expected that the Scheme will become Effective in the second half of 2017, subject to the Conditions and certain further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document.

-- The Offer is also subject to the approval by Prospect Shareholders of certain resolutions at the Prospect ASM to approve the issue of the New Prospect Shares as consideration under the Offer. The Prospect Directors (save for Curtis Freeze due to a conflict of interest) have unanimously agreed to recommend that Prospect Shareholders vote in favour of the special resolutions to be proposed at the Prospect ASM. The Prospect Directors have irrevocably undertaken to vote in favour of such resolutions in respect of their own beneficial holdings of 180,530 Prospect Shares representing, in aggregate, approximately 0.11 per cent. of Prospect's issued ordinary share capital outside treasury.

-- If the Scheme does not become Effective by the Longstop Date, the Offer will lapse, except where the approval of Scheme Shareholders at the Court Meeting and TPJF Shareholders at the TPJF General Meeting is obtained before this date, in which case the Longstop Date for the Offer may be extended to such later date as Prospect and the Independent TPJF Directors may agree and, if appropriate, the Court and the Panel may approve.

-- TPJF Shareholders who hold either a direct account with JASDEC or an account with one of the account management institutions (a "JASDEC Account") and have a standing proxy or a mailing address in Japan and who make a valid notification to Equiniti Limited acting as receiving agent (the "Receiving Agent") by completing and submitting a JASDEC settlement form ("Form A") (which will accompany the Scheme Document), will have the New Prospect Shares to which they are entitled pursuant to the terms of the Scheme delivered to the relevant JASDEC Account by no later than the date which is 14 days after the Effective Date.

-- TPJF Shareholders who do not have a JASDEC Account and a standing proxy or mailing address in Japan and who are unable or unwilling to open such an account and submit Form A to the Receiving Agent, may instead choose to complete and submit a sub-account opening form ("Form B") (which will accompany the Scheme Document) to the Receiving Agent, thereby opening a sub-account with Equiniti Financial Services Limited acting as fiduciary (the "Fiduciary") to receive and hold the New Prospect Shares to which they are entitled pursuant to the terms of the Scheme on their behalf.

-- In the case of TPJF Shareholders who neither validly complete and submit Form A nor Form B to the Receiving Agent, they will initially have the New Prospect Shares to which they are entitled pursuant to the terms of the Scheme held on their behalf by the Fiduciary and such New Prospect Shares will ultimately be sold in the market in accordance with the approved Sales Policy, details of which are set out in this Announcement with funds being remitted to the address set out on the TPJF Shareholder register.

-- In order to provide sufficient information to its new shareholders, following completion of the Offer, Prospect has committed to, amongst other things, providing an English translation of significantly all of its corporate website and all announcements made by Prospect in Japan, including quarterly NAV updates, and to simultaneously release such translated announcements on RNS Reach in the UK, as well as English translations of shareholder communications and company results, and to fund regular independent English language research on Prospect which would also be uploaded to its website. In addition, an English speaking investor relations professional has been hired by Prospect who will be the main contact for English speaking investors.

-- The Independent TPJF Directors, who have been so advised by Stockdale, the Company's financial adviser, consider the terms of the Offer to be fair and reasonable so far as TPJF Shareholders are concerned. In providing its advice to the Independent TPJF Directors, Stockdale has taken into account the commercial assessments of the Independent TPJF Directors.

-- Accordingly, the Independent TPJF Directors intend unanimously to recommend that TPJF Shareholders vote in favour of the resolutions relating to the Offer at the Court Meeting and the TPJF General Meeting. The Independent TPJF Directors do not hold any TPJF Shares.

-- Prospect has received letters of intent from certain institutional TPJF Shareholders (who are listed in Appendix III to this Announcement) to vote or procure the vote in favour of the resolutions in relation to the Offer in respect of their entire beneficial holdings of TPJF Shares amounting, in aggregate, to 58,196,952 TPJF Shares, representing approximately 63.02 per cent. of the existing issued share capital of TPJF.

Commenting on the Offer on behalf of Prospect, Curtis Freeze, President of Prospect, said:

"I am pleased to announce this strategically important transaction for Prospect and TPJF. I am confident that a Prospect/TPJF combination will significantly benefit our respective stakeholders. Together, we plan to pursue various collaboration opportunities and to further expand the investment business in the future. I strongly believe that together we can achieve this goal."

Commenting on the Offer on behalf of the Independent TPJF Directors, John Hawkins, Non-Executive Chairman of TPJF, said:

"The Offer represents an attractive implied value for TPJF and is at a level that we believe should be put to our shareholders. It provides a healthy premium over the recent market share price and would create a strong platform for future growth and value creation."

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Offer will be subject to the Conditions and certain further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II to this Announcement contains the sources of information and bases of calculation of certain information contained in this Announcement. Appendix III to this Announcement contains a summary of the letters of intent and irrevocable undertakings received in relation to the Offer. Appendix IV to this Announcement contains definitions of certain terms used in this Announcement.

Any statement of intention, belief or expectation for the Combined Group following the Effective Date is an intention, belief or expectation of the Prospect Directors and not of the TPJF Directors.

A copy of this Announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on the website of TPJF at www.prospectjapanfund.com, along with certain other documentation required to be posted online under the Code.

Enquiries:

 
Prospect Co., Ltd. 
 Curtis Freeze, President                Tel: +1 808 383 3833 
The Prospect Japan Fund Limited 
 John Hawkins, Non-Executive Chairman    Tel: +44 (0)1481 745 
                                         918 
Strand Hanson Limited 
 (Joint Financial Adviser to Prospect)    Tel: +44 (0)207 409 3494 
 Stuart Faulkner 
 Matthew Chandler 
 James Dance 
Mizuho Bank, Ltd. (Corporate Advisory 
 department)                              Tel: +81 (0) 3 3284 1655 
 (Joint Financial Adviser to Prospect) 
 Ryo Kamisaku 
 Eiichi Igarashi 
Stockdale Securities Limited 
 (Financial Adviser to TPJF)              Tel: +44 (0) 20 7601 
 Daniel Harris                            6100 
 David Coaten 
 

Important Notices

Strand Hanson Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Prospect as joint financial adviser in connection with the Offer and other matters set out in this Announcement and for no one else and will not be responsible to anyone other than Prospect for providing the protections afforded to its clients or for providing advice in relation to the Offer and other matters set out in this Announcement. Neither Strand Hanson Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Strand Hanson Limited in connection with this Announcement, any statement contained herein or otherwise.

Mizuho Bank, Ltd. (Corporate Advisory department), an investment banking arm of Mizuho Financial Group, which is regulated by the Japanese Financial Services Agency, is acting exclusively for Prospect as joint financial adviser in connection with the Offer and other matters set out in this Announcement and for no one else and will not be responsible to anyone other than Prospect for providing the protections afforded to its clients or for providing advice in relation to the Offer and other matters set out in this Announcement. Neither Mizuho Bank, Ltd. (Corporate Advisory department) nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Mizuho Bank, Ltd. (Corporate Advisory department) in connection with this Announcement, any statement contained herein or otherwise.

Stockdale Securities Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for TPJF as financial adviser in connection with the Offer and other matters set out in this Announcement and for no one else and will not be responsible to anyone other than TPJF for providing the protections afforded to its clients or for providing advice in relation to the Offer and other matters set out in this Announcement. Neither Stockdale Securities Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Stockdale Securities Limited in connection with this Announcement, any statement contained herein or otherwise.

Further information

This Announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or invitation, or the solicitation of an offer, to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise nor will there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.

The Offer will be made solely pursuant to the disclosures and information contained in the Scheme Document which, together with the Forms of Proxy, will contain the full terms and conditions of the Offer, including details of how TPJF Shareholders may vote at the Meetings in respect of the Offer.

TPJF will prepare the Scheme Document to be distributed to TPJF Shareholders (with input from Prospect, including with respect to information about the New Prospect Shares and the Combined Group). TPJF urges TPJF Shareholders to read the Scheme Document when it becomes available because it will contain important information in relation to the Offer, the New Prospect Shares and the Combined Group. Any vote in respect of the Scheme or other response in relation to the Offer should be made only on the basis of the information contained in the Scheme Document.

This Announcement does not constitute a prospectus or prospectus equivalent document.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Overseas jurisdictions

The release, publication or distribution of this Announcement in jurisdictions other than the UK and Guernsey may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK and Guernsey should inform themselves about, and observe any applicable requirements. In particular, the ability of persons who are not resident in the UK or Guernsey to participate in the Offer may be affected by the laws of the relevant jurisdictions in which they are located. This Announcement has been prepared for the purpose of complying with English law and Guernsey law and with the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the UK and Guernsey.

The Offer will be subject to the applicable requirements of the Companies Law of Guernsey, the Court (as a result of TPJF being incorporated in Guernsey) and the GFSC (as a result of TPJF being an authorised closed-ended investment scheme in Guernsey), with the applicable requirements of English law, the Code, the Panel, the London Stock Exchange and the FCA (as a result of TPJF being listed on the London Stock Exchange) and also with the applicable requirements of Japanese laws, JASDEC, the Tokyo Stock Exchange and the Japanese Financial Services Agency (as a result of Prospect being a Japanese company, listed on the Tokyo Stock Exchange).

The Offer may not be made directly or indirectly, in or into, or by the use of (electronic) mail or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and no person may vote in favour of the Scheme by any such use, means, instrumentality or facilities. Accordingly, copies of this Announcement, the Scheme Document, the Notices of Court Meeting and TPJF General Meeting, the Forms of Proxy and all other documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. All persons receiving this Announcement (including, without limitation, custodians, nominees and trustees) should observe these restrictions and any applicable legal or regulatory requirements of their jurisdiction and must not mail or otherwise forward, send or distribute this Announcement in, into or from any Restricted Jurisdiction.

The receipt of securities pursuant to the Offer by Overseas Shareholders may be a taxable transaction under applicable national, state and local, as well as foreign and other tax laws. Each Overseas Shareholder is urged to consult their independent professional adviser regarding the tax consequences of accepting the Offer.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Additional information for US investors

These materials are not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States.

The New Prospect Shares have not been and will not be registered under the US Securities Act of 1933 (the "US Securities Act") or under the securities laws of any State or other jurisdiction of the United States. Accordingly, the New Prospect Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into the United States absent registration under the US Securities Act or an exemption therefrom. The New Prospect Shares issued pursuant to the Offer are expected to be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. There will be no public offer of New Prospect Shares in the United States.

TPJF is organised under the laws of Guernsey and Prospect is organised under the laws of Japan. All of the officers and directors of TPJF are residents of countries other than the United States, and most of the officers and directors of Prospect are residents of countries other than the United States. It may not be possible to sue TPJF and Prospect in a non-US court for violations of US securities laws. It may be difficult to compel TPJF, Prospect and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court.

The Offer, to be implemented by way of the Scheme, is being made to acquire the entire issued and to be issued share capital of a company incorporated in Guernsey by way of a scheme of arrangement provided for under Part VIII of the Companies Law of Guernsey. A transaction effected by way of a scheme of arrangement is not subject to the proxy solicitation or tender offer rules under the US Securities Exchange Act of 1934 (the "US Exchange Act"). Accordingly, the Scheme will be subject to the disclosure requirements, rules and practices applicable in the UK and Guernsey to schemes of arrangement and takeover offers, which differ from the disclosure requirements, style and format of US tender offer and proxy solicitation rules. If Prospect determines to extend the offer into the US, the Offer will be made in compliance with applicable US laws and regulations. Financial information included in this Announcement and the Scheme Document has been or will have been prepared in accordance with non-US accounting standards that may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. However, if Prospect were to elect to implement the Offer by means of a contractual offer, rather than the Scheme, such offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Such offer would be made in the US by Prospect and no one else.

Neither the US Securities and Exchange Commission nor any securities commission of any state of the United States has approved or disapproved the Offer, nor have such authorities passed upon or determined the fairness of the Offer or the adequacy or accuracy of the information contained in this Announcement. Any representation to the contrary is a criminal offence in the United States.

If the Offer is required to be made in the US, it will be done in compliance with the applicable tender offer rules under the US Exchange Act.

Forward-looking statements

This Announcement may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Prospect and/or TPJF and certain plans and objectives of Prospect with respect thereto. These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements also often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning. These statements are based on assumptions and assessments made by Prospect and/or TPJF (as applicable) in light of their experience and perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement. Prospect does not assume any obligation to update or correct the information contained in this Announcement (whether as a result of new information, future events or otherwise), except as required by the Panel, the Code or by applicable law.

Forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Announcement. Neither Prospect nor TPJF undertakes any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except to the extent legally required.

There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business and competitive environments, market and regulatory forces, future exchange and interest rates, changes in tax rates, and future business combinations or dispositions.

For a discussion of important factors which could cause actual results to differ from forward-looking statements in relation to the Prospect Group or the TPJF Group, refer to the annual report and accounts of the Prospect Group for the financial year ended 31 March 2016 and of the TPJF Group for the financial year ended 31 December 2016, respectively.

No profit forecasts, quantified financial benefit statements or estimates

No statement in this Announcement is intended, or is to be construed, as a profit forecast, profit estimate or quantified financial benefit statement for any period. No statement in this Announcement should be interpreted to mean that earnings per TPJF Share or earnings per Prospect Share for the current or future financial years would necessarily match or exceed the historical published earnings per TPJF Share or earnings per Prospect Share.

Dealing and Opening Position Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of the offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and availability of hard copies

This Announcement and the documents required to be published pursuant to Rule 26.1 of the Code will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on TPJF's website at www.prospectjapanfund.com by no later than 12.00 p.m. (London time) on the Business Day following this Announcement.

Neither the content of any website referred to in this Announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this Announcement.

You may request a hard copy of this Announcement by contacting TPJF's company secretary, Northern Trust International Fund Administration Services (Guernsey) Limited, on +44 (0) 1481 745 918. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

Electronic Communications

Please be aware that addresses, electronic addresses and certain other information provided by TPJF Shareholders, persons with information rights and other relevant persons for the receipt of communications from TPJF may be provided to Prospect during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Time

All times shown in this Announcement are London times, unless otherwise stated.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION (INCLUDING THE UNITED STATES) WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

31 May 2017

RECOMMED ALL-SHARE OFFER

for

THE PROSPECT JAPAN FUND LIMITED

by

PROSPECT CO., LTD.

TO BE IMPLEMENTED BY MEANS OF A SCHEME OF ARRANGEMENT

UNDER PART VIII OF THE COMPANIES LAW OF GUERNSEY

   1.         Introduction 

The Prospect Directors and the Independent TPJF Directors are pleased to announce that they have reached agreement on the terms of a recommended share for share exchange offer for the entire issued and to be issued share capital of TPJF by Prospect (the "Offer"). It is intended that the Offer will be implemented by way of a Court-sanctioned scheme of arrangement between TPJF and its shareholders under Part VIII of the Companies Law of Guernsey (the "Scheme").

Prospect, a Japanese company listed on the Tokyo Stock Exchange, is the parent company of the investment manager and investment adviser to TPJF, being Prospect Asset Management (Channel Islands) Ltd. ("PAM(CI)") and Prospect Asset Management, Inc. ("PAMI"), respectively. Mr Rupert Evans, a non-executive director of TPJF, is also a non-executive director of PAM(CI) and is therefore considered not to be "independent" and is not part of the committee of Independent TPJF Directors formed to assess the Offer. The Independent TPJF Directors continue to have regard to the interests of all TPJF Shareholders, in accordance with their duties as directors.

If successful, the combination of TPJF and Prospect will result in TPJF Shareholders holding approximately 57.6 per cent. of the Combined Group and Prospect Shareholders holding approximately 42.4 per cent. of the Combined Group.

   2.         The Offer 

Under the terms of the Offer, which will be subject to the Conditions and further terms summarised below and in Appendix I to this Announcement and to the full terms and conditions to be set out in the Scheme Document, TPJF Shareholders will be entitled to receive:

   for each TPJF Share   2.5 New Prospect Shares 

This Exchange Ratio attributes an implied value for the entire issued share capital of TPJF of approximately US$146.6 million (based on the middle market closing price of Yen70.50 per Prospect Share on 30 May 2017, being the last Business Day in Japan prior to the date of this Announcement and using an exchange rate of 111.03 Yen/US$).

At the value implied by the Exchange Ratio, the Offer represents a premium of approximately:

-- 67.98 per cent. to the middle market closing price of US$0.945 per TPJF Share on 9 January 2017 (being the last Business Day in London prior to the start of the Offer Period);

-- 71.05 per cent. to the volume weighted average price for TPJF Shares of US$0.928 over the three month period ended on and including 9 January 2017 (being the last Business Day in London prior to the start of the Offer Period);

-- 45.63 per cent. to the middle market closing price of US$1.09 per TPJF Share on 30 May 2017 (being the last Business Day in London prior to the date of this Announcement); and

   --           28.13 per cent. to TPJF's last published NAV per share of US$1.2389 on 26 May 2017*. 

Note:

* - This NAV calculation is on the basis that the Company's holding of SARs is valued at par. As set out in the Company's announcement of 26 May 2017, if the SARs were to be 'fair valued' using the Black-Scholes-Merton model, in line with TPJF's annual financial statements, the NAV per share would be US$1.3380. At the value implied by the Exchange Ratio, the Offer would represent a premium of approximately 18.64 per cent. to such alternative NAV per TPJF Share.

Following completion of the Offer, TPJF Shareholders will hold approximately 57.6 per cent. of the Combined Group and Prospect Shareholders will hold approximately 42.4 per cent. of the Combined Group.

The New Prospect Shares will be issued credited as fully paid and will rank pari passu in all respects with existing Prospect Shares in issue at the time the New Prospect Shares are issued, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling after the date on which the Scheme becomes Effective.

Fractional entitlements to New Prospect Shares for each TPJF Shareholder will be rounded down to an integral number. These fractional entitlements will be aggregated and sold to Prospect as soon as practicable after the Effective Date in accordance with the Companies Act of Japan, Prospect's articles of incorporation and its share handling regulations. The net proceeds of such sale shall be contributed towards the costs of the settlement arrangements for the Offer described further in paragraph 15 of this Announcement.

It is expected that the Scheme Document will be published as soon as reasonably practicable. It is therefore expected that the Scheme will become Effective in the second half of 2017, subject to the Conditions and certain further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document.

   3.         Background to and reasons for the Offer 

The Prospect Group comprises a diverse range of businesses, reflecting its past mergers and acquisitions activity, and the Prospect Board believes that the proposed combination with TPJF would create a strong platform for future growth and value creation for the benefit of shareholders of both companies.

In particular, TPJF's portfolio companies span a number of industry sectors where Prospect is already active and has considerable experience and expertise, including real estate, finance and construction. As such there are clear synergistic benefits and cost savings which should serve to accelerate the delivery of the Combined Group's growth strategy to capitalise on opportunities arising from ongoing structural changes and reforms in Japan.

Furthermore, the Prospect Board is confident that the stronger balance sheet of the Combined Group and enhanced debt capacity would facilitate access to potential acquisition debt financing and growth capital to help drive beneficial corporate activity and change in TPJF's investee companies and thereby unlock the inherent value in the Combined Group's portfolio.

The Prospect Board believes that as a relatively small and specialist closed-ended investment company on the Main Market of the London Stock Exchange (with the restraints, regulatory burden and costs associated with such a listing), it is difficult for TPJF to attract and retain interest and research coverage in its activities and it therefore suffers from a general lack of liquidity and low trading volumes in its shares with a relatively small and concentrated share register. In contrast, Prospect has a much larger and more active shareholder base in Japan and consequently greater liquidity, which the Prospect Board believes should prove attractive to those TPJF Shareholders who continue to be shareholders in the Combined Group.

Under the direction and support of Mr Freeze, working closely with his investment team at Prospect, PAMI and PAM(CI), the Prospect Board believes that the Combined Group will be well placed to generate returns for shareholders from its combined asset portfolio over the medium to longer term, improve liquidity and significantly reduce or eliminate the prevailing sizeable market discount to the underlying NAV of the two groups' investments.

   4.         Recommendation of the Independent TPJF Directors 

The Independent TPJF Directors, who have been so advised by Stockdale, the Company's financial adviser, as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Independent TPJF Directors, Stockdale has taken into account the commercial assessments of the Independent TPJF Directors. Stockdale is providing independent financial advice to the Independent TPJF Directors for the purposes of Rule 3 of the Code.

Accordingly, the Independent TPJF Directors intend unanimously to recommend that TPJF Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the resolutions to be proposed at the TPJF General Meeting, which will be convened in connection with the Offer.

In addition, all of the Prospect Directors (save for Mr Freeze due to a conflict of interest) intend unanimously to recommend that Prospect Shareholders vote in favour of the special resolutions to be proposed at the Prospect ASM. The Prospect Directors have irrevocably undertaken to vote in favour of such resolutions in respect of their own beneficial holdings of 180,530 Prospect Shares representing, in aggregate, approximately 0.11 per cent. of Prospect's issued ordinary share capital outside treasury on 30 May 2017 (being the latest practicable date prior to this Announcement).

   5.         Background to and reasons for the recommendation of the Independent TPJF Directors 

For some time now, the share price of TPJF has been trading at a discount to TPJF's NAV per share. On 9 January 2017, the date immediately prior to the announcement of the Possible Offer on 10 January 2017, the middle market closing price per TPJF Share was US$0.945. This represented a discount of 25.06 per cent. to TPJF's then latest published NAV per share of US$1.261 on 1 January 2017. This discount has remained fairly consistent, averaging approximately 30.4 per cent. for the two years prior to the date of the announcement made on 10 January 2017 in accordance with Rule 2.4 of the Code, being the start of the Offer Period.

TPJF has recently underperformed against many of the key UK listed investment trusts that invest in Japanese assets and, due to its investment policy, the Independent TPJF Directors cannot see short term catalysts to create value for shareholders. Accordingly, the Independent TPJF Directors believe that the Offer therefore presents TPJF Shareholders with a significant premium to both the TPJF Share price immediately prior to commencement of the Offer Period and the last published NAV per share of US$1.2389 on 26 May 2017, based upon the Exchange Ratio and the current Prospect share price.

A key ongoing challenge for TPJF stock has been the weakness in its liquidity. In the last two years, average daily trading volume has been 78,942 shares or 0.085 per cent. of the total issued shares of the Company. Prospect has far greater levels of liquidity, primarily driven in recent years from its predominantly retail share register. Over the same period, the volume traded in Prospect was over 22 times the volume traded in TPJF, in each case as a percentage of their respective total shares in issue, equivalent to 1.94 per cent. of its issued share capital.

Liquidity in Prospect has been further enhanced recently through the announcement of an uplift in its dividend which has proven very attractive in Japan where yields on Japanese bonds have been in decline in recent years and most recently negative for certain bond terms. At the Prospect share price immediately prior to commencement of the Offer Period, at close of business on 9 January 2017, of Yen67, the dividend of Yen3 for the period to 31 March 2017 represents a yield of approximately 4.5 per cent., placing Prospect in the top 15 of the 3,586 stocks listed on the TSE for yield. As evidence of the demand for yield in Japan, on the day following the announcement of the proposed tripling of its yield on 6 December 2016, trading volume in the stock was 74.3m shares or 43.8 per cent. of the total issued shares outside treasury. Additionally, Prospect has, in its recently published unaudited annual accounts, again forecast a dividend of Yen3 per share for the period to 31 March 2018. If the Offer successfully completes, TPJF Shareholders may be entitled to that dividend if it is payable and if they are holders of Prospect consideration shares at the relevant record date.

The Independent TPJF Directors believe that the potentially larger size of the Combined Group could also lead to a further improvement in liquidity for Prospect as the larger entity may become increasingly attractive to institutional investors both inside Japan and abroad and with the prospects for wider research coverage on the stock.

The Offer enables TPJF Shareholders to own shares in Prospect. The Independent TPJF Directors are well acquainted with Prospect as a result of the historical management of TPJF by Prospect's subsidiary companies, PAM(CI) and advisory business, PAMI and its President, Curtis Freeze, since 1994 and consider Mr Freeze to have a strong reputation for identifying potentially lucrative investment opportunities in Japan and elsewhere. Furthermore, since taking over leadership of Prospect in 2010, Mr Freeze has transformed a company which was focused solely on condominium development in Tokyo, and diversified into the current four business lines operating in a number of jurisdictions. Over that period, the market capitalisation of Prospect has risen from approximately US$15.97 million to US$107.81 million.

It should, however, be emphasised that TPJF Shareholders will become shareholders of a company whose current assets and constituent underlying businesses are private companies. Therefore, evaluation of the Combined Group's NAV will be less transparent when compared with TPJF to date and the nature of the businesses that Prospect is currently involved with will have a different risk/reward profile than TPJF, whose assets are primarily listed equities on Japanese stock markets. Furthermore, TPJF Shareholders will be exchanging their shares in an unlevered company for shares in a company with a stated total debt equity ratio of 81.7 per cent., based on Prospect's balance sheet as at 31 March 2017. Further details of the risks associated with accepting the Offer will be set out in the Scheme Document.

The structure arising from the combination of the two companies will also offer both shareholders of Prospect and TPJF the potential for enhancement of shareholder value. The acquisition of TPJF and the transfer of ownership of assets into the Japanese market will further offer Mr Freeze greater flexibility and bargaining power locally to undertake potentially value enhancing deals and an improved chance of realising asset values and securing access to capital on better terms going forward. In addition, the acquisition will offer certain cost savings as a result of the delisting of the TPJF Shares from the London Stock Exchange. This Announcement provides further information on the various business segments of Prospect and further information will also be set out in the Scheme Document.

   6.         Letters of intent and Irrevocable Undertakings 

Letters of Intent

Prospect has received letters of intent from each of the following TPJF Shareholders to vote in favour of the Scheme at the Court Meeting and in favour of the resolutions to be proposed at the TPJF General Meeting in respect of the number of TPJF Shares indicated:

   --      Lazard Asset Management Limited in respect of 23,293,778 TPJF Shares; 
   --      1607 Capital Partners in respect of 17,997,489 TPJF Shares; 
   --      Weiss Asset Management LP in respect of 8,370,506 TPJF Shares; 
   --      South Yorkshire Pensions Authority in respect of 4,540,000 TPJF Shares; 
   --      Wells Capital Management in respect of 3,995,179 TPJF Shares, 

representing, in aggregate, approximately 63.02 per cent. of the issued ordinary share capital of TPJF on 30 May 2017 (being the latest practicable date prior to this Announcement). Further details of these letters of intent are set out in Appendix III to this Announcement.

Irrevocable Undertakings

TPJF has also received irrevocable undertakings from all of the Prospect Directors (save for Mr Henderson who does not hold any Prospect Shares) to vote in favour of the resolutions to be proposed at the Prospect ASM in relation to the Offer from the Prospect Directors who hold or are beneficially entitled to 180,530 Prospect Shares, representing, in aggregate, approximately 0.11 per cent. of the Existing Prospect Share Capital. Further details of these irrevocable undertakings (including the circumstances in which they will fall away) are set out in Appendix III to this Announcement.

   7.         Dividend policy for the Combined Group 

The Prospect Board considers returning profits to shareholders to be an important management issue, and its basic policy, which will continue in place for the Combined Group following the Scheme becoming Effective, is to maintain stable and continuous dividends that take business performance into consideration, while securing the retained earnings necessary for stable growth of the Combined Group in the future and for responding to changes in the business environment.

   8.         Information on the Prospect Group 

Prospect (Japanese name: 'Kabushiki Kaisha Prospect') is a Japanese company listed on the Tokyo Stock Exchange (ticker code: 3528). It was originally established in 1937 and owns and operates a number of Japanese and Hawaii based businesses including a real estate developer, a construction company, a house building company, an investment management business and a solar power generation business, employing over 180 people. Prospect's strategy is to capitalise on opportunities arising from structural changes in Japan.

Prospect's issued share capital comprises 169,783,473 ordinary shares (excluding 2,773,334 ordinary shares held in treasury), which at the prevailing middle market closing share price on 30 May 2017 of Yen70.50, equates to a current market capitalisation of Yen11.97 billion (approximately US$107.81 million). Its latest published NAV as at 31 March 2017 was Yen12.49 billion (approximately US$112.48 million). In its unaudited results for the year ended 31 March 2017, Prospect generated Yen14.14 billion (US$127.38 million) of revenue and Yen2.26 billion (US$20.38 million) gross profit, declaring a dividend of Yen3 per Prospect Share.

The Prospect Directors comprise Curtis Rudolf Freeze (President and a director of Prospect's investment management subsidiaries), Masato Tabata (Managing Director) and Dominic Henderson (Director).

In 2004, PAMI became TPJF's investment adviser and, in 2006, Prospect acquired PAMI. Since that time, Prospect and TPJF have established a strong and co-operative relationship, leading to TPJF accumulating a stake in Prospect Shares and also subscribing for certain Stock Acquisition Rights (SARs), which are described in more detail below.

Prospect's Business Segments

Real Estate Development

Since entering the real estate business over 20 years ago, Prospect has delivered over 7,686 condominium units to its customers, mainly in the Metropolitan Tokyo area. Prospect's development approach is to take into account the end user's wellbeing and lifestyle, including consideration of factors such as: environmental symbiosis, health, child-rearing, crime prevention and disaster preparedness. Prospect is currently jointly developing a mixed use project in Hawaii, comprising 422 residential units for sale. More than 94 per cent. of the units have been contracted for sale and completion is scheduled for late 2017. Prospect Group employs 60 people in the real estate development segment and, in the year ended 31 March 2017, the segment generated revenue of Yen7.93 billion (US$71.46 million) and segmental profit of Yen0.56 billion (US$5.05 million).

Asset Management

Prospect operates an investment management business, via its wholly owned subsidiaries PAMI and PAM(CI), and is the investment manager to TPJF. Further details on PAMI and PAM(CI) are set out below.

Public Sector Construction

Kidoh Construction Industry Co., Ltd. ("Kidoh") is a wholly owned subsidiary of Prospect and was established in 1946 as a civil engineering and construction contractor to commercialise its unique jacking method and was acquired by Prospect in March 2014. Kidoh holds a number of patents/utility models in relation to construction methods focused on underground jacking works for water/sewerage, gas, telephone, electrical tunnels and also pre-stressed concrete works for building/bridge construction. Kidoh has completed over 2,500km of tunneling since its inception.

In 2015, Kidoh, together with two other Japanese contractors, completed a sizeable underground drainage construction project in Jakarta, Indonesia. Prospect Group employs 105 people in its Public Sector Construction segment and, in the year ending 31 March 2017, the segment generated revenue of Yen5.72 billion (US$51.54 million) and segmental profit of Yen0.29 billion (US$2.59 million).

Renewable Energy

Prospect has 11 solar projects, of which five are producing electricity and six are currently under development and scheduled to come online during the course of the next few years. Once all of the projects are in production, the total output is expected to be approximately 98 mW. Prospect's producing projects are located in Asago in the Hyogo Prefecture (1.1mW) and Rikuzentakata (1.6mW), Ushiku (1.8mW), Katori (2.0mW) and Sanbu Higashi (5.1mW), in the Chiba Prefecture.

To date, Prospect has committed approximately Yen15 billion (US$135.10 million) to its solar projects, and anticipates that the total cost to bring all projects into production, will be approximately Yen25 billion (US$225.16 million). Prospect believes that its renewable energy projects will ultimately prove to be attractive to pension and life insurance companies which are seeking a yield in Japanese Yen. Prospect employs 4 people in its Renewable Energy segment and, in the year ending 31 March 2017, the segment generated revenue of Yen0.25 billion (US$2.26 million) and segmental profit of Yen0.07 billion (US$0.66 million).

In addition, Prospect has signed two letters of intent regarding the development of certain biomass and wood pellet power generation joint venture projects located in Russia. The letters of intent have been signed with RFP Group, the largest forestry industry company in Russia.

Further information on PAM(CI) and PAMI

Prospect Asset Management (Channel Islands) Ltd.

PAM(CI) is a Guernsey incorporated investment manager established in November 1994 and licensed by the GFSC under the POI Law which is 100 per cent. owned by Prospect. It is responsible for managing TPJF's portfolio pursuant to the terms of a management agreement dated 1 December 1994, however PAM(CI) has sub-contracted its advisory authorities to PAMI pursuant to an investment advisory agreement dated 1 December 1994. PAM(CI) has three directors namely Mr Christopher Hill, Mr Rupert Evans and Mr Curtis Freeze. Pursuant to an investment advisory agreement dated 1 January 2014 between Mr Curtis Freeze and PAM(CI), Mr Curtis Freeze provides investment advisory services to PAM(CI) in connection with TPJF.

PAM(CI) receives a monthly management fee in arrears at a rate of 1.5 per cent. per annum of the NAV of TPJF. Of this amount, 0.55 per cent. of TPJF's NAV is paid to PAMI as investment adviser and 0.5 per cent. of the NAV is retained by PAM(CI), with the remaining 0.45 per cent. of the NAV paid to Mr Freeze as investment adviser.

Prospect Asset Management Inc.

PAMI is a U.S. corporation and registered as an investment adviser under the United States Investment Advisers Act of 1940 (as amended), with Securities and Exchange Commission number 801-47749. It is wholly owned by Prospect and, via PAM(CI), has managed TPJF since its inception. PAMI was founded by Mr Freeze in September 1994 and provides investment advisory services in equity portfolio management, specialising in Japanese equities and real estate and seeks to identify either (i) investments offering above average earnings, trading at reasonable valuations; or (ii) companies with undervalued assets, in relation to which an investment may act as a realistic catalyst for positive change.

PAMI has managed closed and open ended investment companies, pooled investment vehicles and discretionary investment accounts in long-only equity, long-short equity, private equity and real estate investment funds in Japan for clients including a sovereign wealth fund, a large fund-of-funds and a family office. Currently, PAMI and PAM(CI) manage two investment funds, TPJF and the Shareholders' Consensus Fund L.P. As at 30 April 2017, PAMI had three clients and approximately US$138.04 million in assets under management, the majority of which are managed on a discretionary basis. PAMI has two directors namely Ms Kaori Matsumoto (President) and Mr Hamilton Smith (Chief Financial Officer). Mr Freeze is a Director of PAMI(CI), and acts as Chief Investment Officer to PAMI.

Pursuant to a consulting agreement, dated 1 April 2017, between PAMI and Prospect, Prospect's research team in Tokyo provides dedicated proprietary fundamental research, analysis and recommendations in respect of the Japanese market and economy to PAMI's investment committee which drives the investment process. This is provided by Prospect for a fee of Yen4,940,000 per month as well as one-half of all performance based-fees received by PAMI from its investors.

   9.         Information on TPJF 

TPJF is an authorised closed-ended investment company, which was incorporated in Guernsey in November 1994 with registration number 28863 and is listed on the Main Market of the London Stock Exchange. It is regulated by the GFSC pursuant to the POI Law and the Authorised Rules. The fund's inception date was 20 December 1994 and its investment objective is to achieve long-term capital appreciation from a portfolio of securities, primarily comprising smaller Japanese companies listed or traded on Japanese stock markets. It has been focused on consolidation opportunities in Japan, especially in the domestic demand and J-REIT sectors, with a current focus on regional banks and logistics companies. Its issued share capital comprises 92,352,602 ordinary shares of US$0.001 each, which at the prevailing market share price of US$1.09 equates to a current market capitalisation of US$100.66 million. Its latest published NAV as at 26 May 2017 (based on valuation of its holding of SARs at par value) was approximately US$114.4 million.

The Company has no employees and the board members comprise John Hawkins (Non-Executive Chairman), Richard Battey (Non-Executive Director) and Rupert Evans (Non-Executive Director).

Rupert Evans is also a non-executive director of PAM(CI) and is therefore not considered to be independent for the purposes of considering the Offer.

The Board is responsible for the determination of the Company's investment policy and has overall responsibility for supervising the Company's activities. However, it has delegated the day-to-day management of its investment portfolio to PAM(CI), as investment manager, with PAMI acting as a United States based Investment Adviser.

The Company's investment policy is that it will invest mainly in shares, but may also invest in equity related instruments such as convertible bonds or warrants issued by smaller Japanese companies and debt instruments. Its assets may also be used to provide venture or start-up capital and for investments in unlisted securities within certain parameters. The Company also currently adheres to certain investment restrictions in connection with maintaining its listing as an investment company on the London Stock Exchange, including a limit of 25 per cent. of the amount of its assets that it may invest or lend in the securities of any one company or single issuer.

The Company has a concentrated portfolio, comprising positions in 9 investee companies across a variety of sectors. As at 30 April 2017, approximately 77.5 per cent. of its total assets was held in listed investments with the balance comprising net current assets.

Stock Acquisition Rights (SARs)

In December 2015, the Company purchased 1,440 SARs for approximately US$2.4 million from Prospect, each of which gives the Company the right to purchase 100,000 Prospect Shares (144 million ordinary shares in total) at an exercise price of Yen5.4 million per SAR (or Yen54 per Prospect Share, subject to an anti-dilution adjustment formula to lower the exercise price in the event of certain new share issuances).

The Company was the sole subscriber for the SARs, which are unlisted and freely transferable and can be exercised at any point from 21 December 2015 until 20 December 2020. In February 2016, following the receipt of shareholder approval, the parties entered into an exercise agreement setting out the terms of the potential exercise of the SARs in order to provide clarity in relation to the timing and circumstances of the exercise of the SARs, which effectively limits TPJF's holding in Prospect to five per cent. of the Company's gross assets from time to time.

Further to the conversion of certain historical convertible bonds and 90 of the SARs, TPJF is currently interested in 6,706,000 Prospect Shares representing approximately 3.95 per cent. of the Existing Prospect Share Capital and 1,350 SARs (to potentially purchase up to a further 135 million Prospect Shares, representing approximately 44.30 per cent. of Prospect's share capital as enlarged by any such issue). For the purposes of the NAV calculation published on 26 May 2017, valuations of the SARs were made on the basis of both par, in which case the NAV was US$1.2389, per share and the Black-Scholes-Merton model which delivered an NAV per share, for information purposes only, with a value of US$1.3380.

   10.       Management, employees, directors and locations 

TPJF does not have any employees or management. The TPJF Board is responsible for the determination of TPJF's investment policy and has overall responsibility for supervising TPJF's activities. However, it has delegated the day to day management of its investment portfolio to PAM(CI), with PAMI acting as a U.S. based Investment Adviser. PAM(CI) and PAMI are both wholly owned subsidiaries of Prospect.

Prospect has no current plans to change TPJF's board of directors (or their compensation for the services provided by them), principal business, location, nor to make any major changes to the business, such as the redeployment of the fixed assets of TPJF. Prospect intends, following the delisting of TPJF, to procure that TPJF relinquishes its authorisation by the GFSC as a collective investment scheme under the POI Law.

   11.       Structure of the Offer 

It is intended that the Offer will be implemented by means of a Court-sanctioned scheme of arrangement between TPJF and the TPJF Shareholders under Part VIII of the Companies Law of Guernsey.

The purpose of the Scheme is to provide for Prospect to become the owner of the entire issued and to be issued ordinary share capital of TPJF. This is to be achieved by the transfer by TPJF Shareholders of all of the TPJF Shares to Prospect, in consideration for which, TPJF Shareholders will receive the New Prospect Shares on the basis of the Exchange Ratio. The transfer to Prospect of the TPJF Shares will result in TPJF becoming a wholly-owned subsidiary of Prospect.

To become Effective, the Scheme requires, among other things, the approval of a majority in number of the Scheme Shareholders present and voting in person or by proxy at the Court Meeting, representing not less than 75 per cent. in value of the Scheme Shares held by such Scheme Shareholders, together with the sanction of the Court and the passing of any additional resolution necessary to implement the Scheme at the TPJF General Meeting.

The Scheme can only become Effective in accordance with its terms if all the Conditions have been satisfied or, where relevant, waived. The Scheme will be conditional upon it becoming unconditional and Effective, subject to the provisions of the Code, by no later than the Longstop Date or such later date (if any) as Prospect or TPJF may, with the consent of the Panel, agree and (if required) the Court may allow.

Under the terms of the Scheme the TPJF Shares being acquired will be fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature whatsoever (except for any arising by operation of law) and together with all rights attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the Effective Date.

Further details of the Scheme, including an indicative timetable for its implementation and notices of the Court Meeting and TPJF General Meeting, will be set out in the Scheme Document, which will also specify the action to be taken by TPJF Shareholders.

The Scheme will be governed by Guernsey law and will be subject to the jurisdiction of the Court. The Scheme will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange, the UKLA, the Companies Act of Japan, the Tokyo Stock Exchange and the JASDEC rules.

   12.       Conditions to the Offer 

The Offer will be subject to the Conditions and further terms summarised below and in Appendix I to this Announcement and to be set out in full in the Scheme Document.

The Offer is conditional on, among other things:

-- the approval of TPJF Shareholders at both the Court Meeting and the TPJF General Meeting and the Scheme becoming unconditional and Effective and being sanctioned by the Court;

-- the approval of Prospect Shareholders of the issuance of the New Prospect Shares at the Prospect ASM; and

   --           admission of the New Prospect Shares to trading on the Tokyo Stock Exchange. 

The New Prospect Shares will not be, directly or indirectly, offered or sold in Japan. The New Prospect Shares have not been and will not be registered under the FIEA. Prospect is not required to publish a prospectus or offering circular in connection with the issuance of the New Prospect Shares.

In order to issue new shares in the capital of Prospect on favourable terms for TPJF Shareholders (as will be the case with the issuance of the New Prospect Shares), Prospect is required to seek the approval of Prospect Shareholders and, accordingly, a resolution seeking approval for the terms and conditions of issuance of the New Prospect Shares for the Offer will be put to the Prospect ASM.

The Offer is therefore conditional on, among other things, the requisite resolution being passed by Prospect Shareholders at the Prospect ASM, as set out in greater detail in Condition 3(a) of Part A of Appendix I.

   13.       Scheme Document 

It is expected that the Scheme Document (which will also include a Form A, Form B and the Forms of Proxy) will be published as soon as practicable. The Scheme Document will be made available to all TPJF Shareholders (other than Restricted Overseas Persons) at no charge to them.

TPJF Shareholders are urged to read the Scheme Document in full because it will contain important information. Any TPJF Shareholder who is in any doubt about the content of this Announcement should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

   14.       Delisting 

The last day of dealings in, and registration of transfers of, TPJF Shares (other than the registration of the transfer of the Scheme Shares to Prospect pursuant to the Scheme) on the London Stock Exchange is expected to be the Business Day immediately prior to the Effective Date, following which all TPJF Shares will be suspended from the Official List and from trading on the London Stock Exchange's Main Market for listed securities and no transfers will be registered after 6.00 p.m. (London time) on that date.

It is intended that applications will be made to the London Stock Exchange to cancel trading in TPJF Shares on its Main Market for listed securities, and to the UK Listing Authority to cancel the listing of the TPJF Shares on the Official List, in each case being conditional upon the Scheme becoming Effective and to take effect from or shortly following the Effective Date.

On the Effective Date, entitlements to TPJF Shares held within the CREST system will be cancelled (and such entitlements rematerialised), and share certificates in respect of TPJF Shares will cease to be valid. Prospect intends, following the delisting, to procure that TPJF relinquishes its authorisation by the GFSC as a collective investment scheme under the POI Law.

   15.       Settlement 
   15.1      The New Prospect Shares as consideration 

The consideration that TPJF Shareholders will receive pursuant to the Scheme will be the New Prospect Shares, to which they will be entitled in exchange for their TPJF Shares on the basis of the Exchange Ratio (i.e. for each TPJF Share transferred to Prospect, a TPJF Shareholder will receive 2.5 New Prospect Shares). Fractional entitlements to New Prospect Shares for each TPJF Shareholder will be rounded down to an integral number. These fractional entitlements will be aggregated and sold to Prospect as soon as practicable after the Effective Date in accordance with the Companies Act of Japan, Prospect's articles of incorporation and its share handling regulations. The net proceeds of such sale shall be contributed towards the costs of the settlement arrangements for the Offer.

   15.2      Background to Settlement of Listed Japanese Shares 

The Prospect Shares are listed and traded on the Tokyo Stock Exchange (as will the New Prospect Shares be, once allotted, issued and admitted). The Japanese book-entry system for listed shares of Japanese companies under the Act on Book-Entry of Company Bonds, Shares, etc. of Japan (the "Book-Entry Act") applies to the shares of Prospect's common stock. Pursuant to this system, all shares of Japanese listed companies (including Prospect) are dematerialised and transfers of such shares are effected through an entry in the record maintained by Japan Securities Depository Center, Inc. ("JASDEC"), which is Japan's central securities depository and the only institution that is designated as a clearing house under the Book-Entry Act.

In order to hold and trade listed shares, investors must either have an account with JASDEC or, failing that, an account with an account management institution ("AMI"). AMIs are financial instruments business operators (i.e. securities firms), banks, trust companies and certain other financial institutions that meet the requirements prescribed by the Book-Entry Act.

As such, transfers (and new allotments) of shares in Prospect's common stock are effected exclusively through entry in the records maintained by JASDEC and the AMIs, and title to the shares passes to the transferee (or allottee) at the time the transfer (or allotment) of the shares is recorded in the transferee's (or allottee's) account at JASDEC or an AMI.

Under the Companies Act of Japan and the Book-Entry Act it is also necessary for a shareholder to provide a name and an address in Japan to be registered in the company's register of members. Pursuant to Prospect's articles of incorporation and its share handling regulations, non-resident shareholders are required to appoint a standing proxy in Japan or to provide a mailing address in Japan.

   15.3      The Settlement Procedure for the New Prospect Shares 

The New Prospect Shares will be available for settlement within 14 days of the Effective Date, in accordance with Rule 31.8 of the Code. This will take place in one of three ways, at the election of each TPJF Shareholder.

   (a)        TPJF Shareholders with a JASDEC Account 

TPJF Shareholders who:

(i) hold either a direct account with JASDEC or an account with one of the AMIs (a "JASDEC Account") and have a standing proxy in Japan or mailing address in Japan; and

(ii) notify Equiniti Limited acting as receiving agent (the "Receiving Agent") of that JASDEC Account and standing proxy in Japan or mailing address in Japan by completing and submitting Form A (which will accompany the Scheme Document) to the Receiving Agent (with a copy to Prospect) by no later than the date which is 7 Business Days prior to the Effective Date,

will have the New Prospect Shares to which they are entitled pursuant to the terms of the Scheme delivered to the relevant JASDEC Account by no later than the date which is 14 days after the Effective Date.

The Scheme Document will provide more information on the ways in which TPJF Shareholders may open a JASDEC Account should they choose to do so.

   (b)        TPJF Shareholders without a JASDEC Account 

TPJF Shareholders who:

(i) do not have a JASDEC Account and a standing proxy in Japan or mailing address in Japan; and

(ii) are unable or unwilling to open one and submit Form A to the Receiving Agent by no later than the date which is 7 Business Days prior to the Effective Date,

may instead choose to complete and submit Form B (which will accompany the Scheme Document) to the Receiving Agent (with a copy to Prospect).

The effect of such TPFJ Shareholders submitting Form B to the Receiving Agent will be to open a sub-account in their name which will enable Equiniti Financial Services Limited, acting as fiduciary (the "Fiduciary") to receive the New Prospect Shares to which the relevant TPJF Shareholders are entitled pursuant to the terms of the Scheme into a master JASDEC Account that is to be established for this purpose pursuant to an arrangement put in place between TPJF, Prospect, the Fiduciary, several affiliates of Mizuho Bank, Ltd. and PAMI.

TPJF Shareholders who validly complete and submit Form B to the Receiving Agent by the specified date will be able to continue to hold and, at their election to sell, the New Prospect Shares through the sub-account opened in their name by the Fiduciary.

The Fiduciary will also ensure that such shareholders will receive all relevant communications to which they are entitled as Prospect Shareholders and will, on instruction, also vote such shareholders' Prospect Shares on any relevant shareholder resolutions on behalf of and as directed by such shareholders.

Any sales through the sub-account will be made in accordance with the relevant sales policy to be approved by TPJF Shareholders at the TPJF General Meeting (the "Sales Request Policy"). In essence, TPJF Shareholders will be able to effect such sales by issuing an instruction to the Fiduciary, who will then arrange for the sale to be executed by the Sales Agent and its broker(s) in accordance with such instruction and Japanese Securities Law.

In the case of TPJF Shareholders who hold less than 1,000 New Prospect Shares, such shareholders will (like all other Prospect Shareholders with a holding of less than 1,000 Prospect Shares) be entitled to require Prospect to repurchase their shares (see further information below in the section 15.3(d)).

Upon settlement of any such sales, the Fiduciary will procure that the net sale proceeds (after deducting dealing and administrative expenses) are translated into Pounds Sterling at the then prevailing JPY/GBP exchange rate and remitted to the relevant shareholder in accordance with their instructions.

TPJF Shareholders who validly complete and submit Form B to the Receiving Agent by the specified date and hold their New Prospect Shares through the sub-account opened in their name by the Fiduciary will, prior to the end of the two year period referred to below, be entitled to extract their New Prospect Shares from the relevant sub-account and transfer them to a JASDEC Account, by completing and submitting Form A to the Receiving Agent.

At the end of a two year period from the Settlement Date, any remaining New Prospect Shares that have not either been sold or transferred from the relevant sub-account to a TPJF Shareholder's JASDEC Account will then be sold in accordance with the termination sales policy, which is also to be approved by TPJF Shareholders at the TPJF General Meeting (the "Termination Sales Policy"). The net proceeds of the termination sales (after deducting dealing and administrative expenses) will then be translated into Pounds Sterling at the then prevailing JPY/GBP exchange rate and remitted to the relevant shareholders. Each TPJF Shareholder on behalf of whom New Prospect Shares are sold in accordance with the Termination Sales Policy will therefore receive the same amount of proceeds (in Pounds Sterling) per New Prospect Share sold, based on the average selling price achieved for all New Prospect Shares sold pursuant to the Termination Sales Policy.

Further details of this arrangement will be set out in the Scheme Document.

   (c)        TPJF Shareholders who take no action 

In the case of TPJF Shareholders who neither:

(i) validly notify the Receiving Agent of their JASDEC Account and a standing proxy in Japan or mailing address in Japan by completing and submitting Form A by no later than the date which is 7 Business Days prior to the Effective Date; nor

(ii) complete and submit Form B to the Receiving Agent by no later than the specified date

(the "No Action Shareholders"),

the New Prospect Shares to which such No Action Shareholders are entitled pursuant to the terms of the Scheme will automatically be delivered to a sub-account with the Fiduciary opened in the name of TPJF as the representative of the No Action Shareholders (the "No Action Sub-Account"), to be held on such No Action Shareholders' behalf until one of two things, as set out in the following sub-paragraphs, occurs.

The Scheme will contain a provision pursuant to which TPJF is appointed as the representative of the No Action Shareholders for this purpose and the Scheme Document will contain further details of this arrangement as a whole.

   (i)         Extraction of New Prospect Shares from the No Action Sub-Account 

Even after the New Prospect Shares to which the No Action Shareholders are entitled pursuant to the terms of the Scheme have been delivered to the No Action Sub-Account, the No Action Shareholders will still have the ability to open a JASDEC Account or a sub-account with the Fiduciary in their own name (with the Fiduciary) by completing and submitting either Form A or Form B, respectively, to the Receiving Agent by no later than the date which is 9 Business Days before the commencement of the sell-down procedure explained in the following sub-paragraph (c)(ii).

No Action Shareholders who validly complete and submit Form A prior to such date will then have their New Prospect Shares transferred after the Settlement Date into the JASDEC Account that they have nominated and those who validly complete and submit Form B prior to such date will then have their New Prospect Shares transferred after the Settlement Date into a sub-account with the Fiduciary in their own name and be entitled to continue to hold and, at their election to sell, the New Prospect Shares in accordance with the Sales Request Policy described above. In addition, the Fiduciary will, on instruction, also vote such shareholders' Prospect Shares on any relevant shareholder resolutions on behalf of and as directed by such shareholders.

   (ii)        New Prospect Shares sold on behalf of No Action Shareholders 

No Action Shareholders who do not validly complete and submit either a Form A or a Form B by no later than the date which is 7 Business Days before a date that will be specified as the date for the commencement of the sales process in the Scheme Document will then have their New Prospect Shares sold on their behalf in the market by the Sales Agent. Such sales on behalf of No Action Shareholders will be made in accordance with a sales policy, which will be approved by TPJF Shareholders at the TPJF General Meeting (the "Sales Policy"). The proceeds of such sales, less dealing and other expenses, will be returned to such No Action Shareholders (having been converted into Pounds Sterling from Japanese Yen at the then prevailing exchange rate).

The Sales Agent will abide by the Sales Policy and will seek to execute the sell-down procedure in such a manner that preserves an orderly market in Prospect Shares for at least a six month period. Whilst the Sales Agent will be encouraged to sell the New Prospect Shares reactively on behalf of the No Action Shareholders, in order to take advantage of high trading volumes due to, amongst other things, news flow, a limit will be imposed of 25 per cent. of the 4-week daily average trading volume for the first 6 months, and 30 per cent. of the 4-week daily average trading volume for the following 6 months for the sale of Prospect Shares in compliance with the Sales Policy and the relevant rules under the Japanese Securities Laws.

The Sales Agent has committed to make commercially reasonable efforts to complete the sell-down procedure on behalf of the No Action Shareholders over a period of up to 12 months following commencement of the sell-down procedure. After completion of the sell-down procedure and sale of all New Prospect Shares held by the No Action Shareholders, all No Action Shareholders on behalf of whom New Prospect Shares are sold will receive the same amount of net proceeds per New Prospect Share and such net proceeds, together with any accrued interest and any dividends received in respect of such shares, will be distributed after the completion of the sell-down procedure and remitted by the Fiduciary by cheque in Pounds Sterling to the No Action Shareholders at the then prevailing JPY/GBP exchange rate.

Further details of the Sales Policy will be set out in the Scheme Document.

   (d)        TPJF Shareholders who will hold less than 1,000 Prospect Shares 

Prospect follows the 'unit share system' (which is standard in Japan) whereby shareholders have one voting right for each unit of shares held by them and shares constituting less than a full unit carry no voting rights. Prospect's articles of incorporation provide that one unit comprises 1,000 Prospect Shares. In addition, pursuant to Rule 15 of the Business Regulations of Tokyo Stock Exchange, shares constituting less than one unit are not deemed to comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Tokyo Stock Exchange.

The TPJF Shareholders whose TPJF Shares would, following settlement, constitute less than a full unit of New Prospect Shares for the purposes of Prospect's articles of incorporation will still be entitled to deliver a Form A or Form B to the Receiving Agent in the same manner as any other TPJF Shareholder is entitled to. Such TPJF Shareholders may, at any time following the Settlement Date, request, through JASDEC or AMIs that Prospect purchases their New Prospect Shares, in accordance with the Companies Act of Japan, Prospect's articles of incorporation and share handling regulations (i) at the closing price of Prospect Shares on the Tokyo Stock Exchange on the day on which such request is received by Prospect's transfer agent, or (ii) if there is no trade on such a day, at the price of the first trading that is entered thereafter. In addition, such TPJF Shareholders with a JASDEC Account who delivered a Form A, may require Prospect to sell to them such number of additional New Prospect Shares to enable their holding of New Prospect Shares to constitute one whole unit for the purposes of Prospect's articles of incorporation, and in accordance with the Companies Act of Japan, Prospect's articles of incorporation and share handling regulations, provided always that Prospect has sufficient shares in treasury to accommodate such a request.

To the extent that such TPJF Shareholders deliver a Form B to the Receiving Agent, their New Prospect Shares will be held through a sub-account opened in their name by the Fiduciary and they shall be afforded the same rights as other TPJF Shareholders who have delivered a Form B to the Receiving Agent, save that (i) they will not be entitled to vote on any relevant shareholder resolutions of Prospect; and (ii) any sale of their New Prospect Shares will be to Prospect itself at the prevailing market price as opposed to through the market by the Sales Agent.

   (e)        Costs to TPJF Shareholders 

None of the costs incurred by Prospect with respect to the initial establishment of the arrangements referred to above will be passed on to the TPJF Shareholders on behalf of whom New Prospect Shares will be held in the sub-accounts with the Fiduciary. To comply with Japanese law, arm's-length account maintenance fees are required to be charged to those shareholders who enjoy the benefit of the arrangements following the Settlement Date. The arm's-length account maintenance fees and other service fees required to be passed on to the TPJF Shareholders on behalf of whom New Prospect Shares are held in the sub-accounts (so as to respect the principle of equality of treatment of shareholders under the Companies Act of Japan) shall not exceed GBP5.25 per sub-account per year.

Such arm's-length account maintenance fees are, however, separate to any dealing expenses, brokerage fees or foreign exchange fees which will be passed on to TPJF Shareholders on behalf of whom sales are made or for whom dividends are received.

   16.       Shareholder Communications following completion 

Following completion of the Offer, Prospect has agreed with the Independent TPJF Directors to undertake the following actions, at its own expense, in order to provide information to its new shareholders, being those TPJF Shareholders who have joined the Prospect shareholder register following issue of the New Prospect Shares.

   --        Prospect will maintain an English language version of Prospect's corporate website (www.prospectjapan.co.jp), with the exception of certain non-material items, which it would not be cost effective to translate. 

-- Prospect will ensure that all corporate press releases, or similar announcements, required to be issued by the Tokyo Stock Exchange will simultaneously be released in English on RNS Reach in the United Kingdom. In addition, these translations will also be available on Prospect's corporate website.

-- Prospect will also ensure that all: (i) shareholder circulars; (ii) notices of annual shareholder meetings and extraordinary special meetings and details of resolutions proposed (and where appropriate the recommendation of the board of directors of Prospect) at general/special meetings and voting instructions; and (iii) notices of any corporate transaction and action to be taken to resolve any matters in respect of the shareholder meetings under the Companies Act of Japan (and where appropriate the recommendation of the board of directors of Prospect) are provided to the relevant new shareholders in English.

-- Prospect will provide English translations of the details in relation to any dividend declarations.

-- Prospect will publish quarterly announcements of its NAV, calculated using Prospect's prevailing Japanese accounting standards and reported in the required format of the Tokyo Stock Exchange, on both RNS Reach and Prospect's corporate website.

-- Prospect's senior management will visit London at least twice a year and will be available for meetings with institutional shareholders during that time. In addition, once a year, Prospect will hold an investor day, in London, to which all Prospect Shareholders will be invited. Notice of the investor day will be published on RNS Reach in the United Kingdom, and on Prospect's corporate website, a month in advance of such investor day.

-- Prospect will retain an equity research provider to write and publish at least two substantive pieces of equity research per annum, in English, on Prospect and its businesses. Such research will be made available on Prospect's corporate website.

-- Prospect would be pleased to host any institutional Shareholder wishing to visit the Prospect Group's operations, but, given Japanese company law would not be able to pay for such visits.

-- Prospect has already retained a full time Investor Relations professional, based in Tokyo, who is bilingual in Japanese / English, to oversee these intended Shareholder Communication activities.

The above-mentioned items are deemed to be Post-Offer Intention Statements, as set out under Rule 19.6 of the Code.

Prospect has also provided legally binding undertakings in relation to these shareholder communications, which will apply for a period of five years from the Settlement Date. Details of these undertakings are summarised in paragraph 17 below under the heading Deed Poll.

   17.       Offer related arrangements 

Confidentiality Agreement

Prospect and TPJF entered into a confidentiality agreement on 2 December 2016 (the "Confidentiality Agreement") pursuant to which each of Prospect and TPJF has undertaken to keep confidential information relating to the other party and not to disclose it to third parties (other than to permitted disclosees) unless required by law or regulation. These confidentiality obligations will remain in force for a period of 12 months from the date of the Confidentiality Agreement.

The Confidentiality Agreement also contains undertakings from both TPJF and Prospect that, for a period of 12 months after the request for return/destruction of confidential information, neither will solicit the other's directors or employees.

Cooperation Agreement

Pursuant to a cooperation agreement dated 31 May 2017 (the "Cooperation Agreement"), among other things:

-- Prospect has agreed to provide TPJF with certain information and assistance in the preparation of the Scheme Document;

-- Prospect has agreed to put the necessary resolutions to enable it to issue the New Prospect Shares to the Prospect ASM and to ensure that the Prospect ASM is held in the last week of June 2017;

-- Prospect has agreed to certain customary restrictions on the conduct of its business during the period pending completion of the acquisition, and which prohibit, among other things: (a) the payment by Prospect of extraordinary dividends, (b) the allotment of further shares (or rights or options in respect of shares) (other than as would be consistent with past practice or pursuant to existing commitments), or (c) any amendment by Prospect of its constitutional documents in any manner than would have a material and adverse impact on the value of, or rights attaching to, the New Prospect Shares;

-- Prospect has agreed that it will cover certain costs incurred by TPJF up to US$2,000,000 in connection with the Offer, with such costs coverage applying on the occurrence of certain specified events which lead to the Scheme not becoming Effective or the Offer not otherwise being completed in accordance with its terms; and

-- Prospect has agreed that in the event Prospect elects to implement the Offer by way of a takeover offer rather than the Scheme, it will do so only with the prior written consent of the Independent TPJF Directors.

Deed Poll

Pursuant to a deed poll entered into by Prospect dated 31 May 2017 (the "Deed Poll"), Prospect undertakes to certain categories of the TPJF Shareholders to take the actions referred to in paragraph 16 above.

The Deed Poll comes into effect from the Settlement Date for a duration of five years.

Master Custody Agreement

Pursuant to a master custody agreement entered into between Prospect, TPJF, the Receiving Agent, the Fiduciary, PAMI and Mizuho Trust & Banking (Luxembourg) S.A. dated 31 May 2017 (the "Master Custody Agreement"), the parties have agreed to implement the arrangements necessary to facilitate the settlement procedure for the New Prospect Shares described in paragraph 15.3 above.

   18.       Litigation 

No material litigation, arbitration proceedings, prosecution or other legal proceedings have been instituted or threatened or remain outstanding against or by a member of the Prospect Group (whether as plaintiff or defendant or otherwise).

   19.       SESC matter 

On 22 March 2017, it was announced that the Securities and Exchange Surveillance Commission of Japan ("SESC") had recommended to the Commissioner of the Financial Services Agency of Japan ("FSAJ") that an administrative monetary penalty payment order be issued in regard to insider trading of the shares of Tri-Stage Inc. ("Tri-Stage") by PAMI pursuant to Article 20(1) of the Act for Establishment of the Financial Services Agency of Japan. The SESC and FSAJ contend that certain trades in the shares of Tri-Stage by PAMI during September and October 2015 were made on the basis of information conveyed to an investment officer of PAMI concerning a buyback by Tri-Stage of its own shares before such information was made public on 20 October 2015. The SESC contends that the actions of PAMI in connection with these trades were in violation of the FIEA.

The administrative monetary penalty recommended by the SESC, under the administrative order, is Yen3,290,000 (approximately GBP24,000 at the foreign exchange rate prevailing on the date of the FSAJ announcement).

There has been no civil or criminal trial conducted by the SESC or the FSAJ against PAMI or any representative of PAMI. There has been no suggestion by the SESC or FSAJ that any criminal or civil proceedings will be brought against PAMI or any individual involved in the trades in question. The matter concerns an administrative order. On 31 May 2017, PAMI decided to pay the monetary penalty of Yen3,290,000 and has therefore made the appropriate filing with the FSAJ, admitting responsibility. As a result of this filing, it is expected that the SESC will take no further action in relation to this matter.

   20.       General 

The Offer will be made on the terms and subject to the Conditions and certain further terms set out in Appendix I to this Announcement and to full terms and conditions which will be set out in the Scheme Document. The sources of information and bases of calculations contained in this Announcement are set out in Appendix II to this Announcement. A summary of the letters of intent and irrevocable undertakings is set out in Appendix III to this Announcement. Certain terms used in this Announcement are defined in Appendix IV to this Announcement.

Each of Prospect and TPJF confirms that it has made an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8 of the Code and both Prospect and TPJF confirm that these disclosures are accurate as at the date of this Announcement.

This Announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR"). Market soundings, as defined in MAR, were taken in respect of the Offer, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to TPJF and its securities.

   21.       Consents 

Each of Strand Hanson, Mizuho and Stockdale has given and not withdrawn its consent to the publication of this Announcement with the inclusion in it of the references to its respective name and (where applicable) advice in the form and context in which they appear.

   22.       Documents available on website 

Copies of the following documents will be made available on TPJF's website at www.prospectjapanfund.com from no later than 12 noon (London time) on 1 June 2017 up to and including the Effective Date or the date the Scheme lapses or is withdrawn, whichever is earlier:

-- the letters of intent and irrevocable undertakings referred to in paragraph 6 above and summarised in Appendix III to this Announcement;

   --           the Confidentiality Agreement; 
   --           the Deed Poll; 
   --           the Cooperation Agreement; 

-- audited final results of Prospect for the 12 months ended 31 March 2016 and unaudited preliminary results of Prospect for the 12 months ended 31 March 2017;

   --           the Master Custody Agreement; and 

-- the written consents provided by each of Strand Hanson, Mizuho and Stockdale referred to in paragraph 21 of this Announcement.

Enquiries:

 
Prospect Co., Ltd. 
 Curtis Freeze, President                           Tel: +1 808 383 
                                                    3833 
The Prospect Japan Fund Limited 
 John Hawkins, Non-Executive Chairman               Tel: +44 (0) 1481 
                                                    745 918 
Strand Hanson Limited 
 (Joint Financial Adviser to Prospect)               Tel: +44 (0) 207 
 Stuart Faulkner                                     409 3494 
 Matthew Chandler 
 James Dance 
Mizuho Bank, Ltd. (Corporate Advisory department) 
 (Joint Financial Adviser to Prospect)               Tel: +81 (0) 3 3284 
 Ryo Kamisaku                                        1655 
 Eiichi Igarashi 
Stockdale Securities Limited 
 (Financial Adviser to TPJF)                         Tel: +44 (0) 20 7601 
 Daniel Harris                                       6100 
 David Coaten 
 

Important Notices

Strand Hanson Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Prospect as joint financial adviser in connection with the Offer and other matters set out in this Announcement and for no one else and will not be responsible to anyone other than Prospect for providing the protections afforded to its clients or for providing advice in relation to the Offer and other matters set out in this Announcement. Neither Strand Hanson Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Strand Hanson Limited in connection with this Announcement, any statement contained herein or otherwise.

Mizuho Bank, Ltd. (Corporate Advisory department), an investment banking arm of Mizuho Financial Group, which is regulated by the Japanese Financial Services Agency, is acting exclusively for Prospect as joint financial adviser in connection with the Offer and other matters set out in this Announcement and for no one else and will not be responsible to anyone other than Prospect for providing the protections afforded to its clients or for providing advice in relation to the Offer and other matters set out in this Announcement. Neither Mizuho Bank, Ltd. (Corporate Advisory department) nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Mizuho Bank, Ltd. (Corporate Advisory department) in connection with this Announcement, any statement contained herein or otherwise.

Stockdale Securities Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for TPJF as financial adviser in connection with the Offer and other matters set out in this Announcement and for no one else and will not be responsible to anyone other than TPJF for providing the protections afforded to its clients or for providing advice in relation to the Offer and other matters set out in this Announcement. Neither Stockdale Securities Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Stockdale Securities Limited in connection with this Announcement, any statement contained herein or otherwise.

Further information

This Announcement is for information purposes only and is not intended to, and does not, constitute or form part of any offer or invitation, or the solicitation of an offer, to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise nor will there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.

The Offer will be made solely pursuant to the disclosures and information contained in the Scheme Document which, together with the Forms of Proxy, will contain the full terms and conditions of the Offer, including details of how TPJF Shareholders may vote at the Meetings in respect of the Offer.

TPJF will prepare the Scheme Document to be distributed to TPJF Shareholders (with input from Prospect, including with respect to information about the New Prospect Shares and the Combined Group). TPJF urges TPJF Shareholders to read the Scheme Document when it becomes available because it will contain important information in relation to the Offer, the New Prospect Shares and the Combined Group. Any vote in respect of the Scheme or other response in relation to the Offer should be made only on the basis of the information contained in the Scheme Document.

This Announcement does not constitute a prospectus or prospectus equivalent document.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Overseas jurisdictions

The release, publication or distribution of this Announcement in jurisdictions other than the UK and Guernsey may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK and Guernsey should inform themselves about, and observe any applicable requirements. In particular, the ability of persons who are not resident in the UK or Guernsey to participate in the Offer may be affected by the laws of the relevant jurisdictions in which they are located. This Announcement has been prepared for the purpose of complying with English law and Guernsey law and with the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the UK and Guernsey.

The Offer will be subject to the applicable requirements of the Companies Law of Guernsey, the Court (as a result of TPJF being incorporated in Guernsey) and the GFSC (as a result of TPJF being an authorised closed-ended investment scheme in Guernsey), with the applicable requirements of English law, the Code, the Panel, the London Stock Exchange and the FCA (as a result of TPJF being listed on the London Stock Exchange) and also with the applicable requirements of Japanese laws, JASDEC, the Tokyo Stock Exchange and the Japanese Financial Services Agency (as a result of Prospect being a Japanese company, listed on the Tokyo Stock Exchange).

The Offer may not be made directly or indirectly, in or into, or by the use of (electronic) mail or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and no person may vote in favour of the Scheme by any such use, means, instrumentality or facilities. Accordingly, copies of this Announcement, the Scheme Document, the Notices of Court Meeting and TPJF General Meeting, the Forms of Proxy and all other documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. All persons receiving this Announcement (including, without limitation, custodians, nominees and trustees) should observe these restrictions and any applicable legal or regulatory requirements of their jurisdiction and must not mail or otherwise forward, send or distribute this Announcement in, into or from any Restricted Jurisdiction.

The receipt of securities pursuant to the Offer by Overseas Shareholders may be a taxable transaction under applicable national, state and local, as well as foreign and other tax laws. Each Overseas Shareholder is urged to consult their independent professional adviser regarding the tax consequences of accepting the Offer.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Additional information for US investors

These materials are not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States.

The New Prospect Shares have not been and will not be registered under the US Securities Act of 1933 (the "US Securities Act") or under the securities laws of any State or other jurisdiction of the United States. Accordingly, the New Prospect Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into the United States absent registration under the US Securities Act or an exemption therefrom. The New Prospect Shares issued pursuant to the Offer are expected to be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. There will be no public offer of New Prospect Shares in the United States.

TPJF is organised under the laws of Guernsey and Prospect is organised under the laws of Japan. All of the officers and directors of TPJF are residents of countries other than the United States, and most of the officers and directors of Prospect are residents of countries other than the United States. It may not be possible to sue TPJF and Prospect in a non-US court for violations of US securities laws. It may be difficult to compel TPJF, Prospect and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court.

The Offer, to be implemented by way of the Scheme, is being made to acquire the entire issued and to be issued share capital of a company incorporated in Guernsey by way of a scheme of arrangement provided for under Part VIII of the Companies Law of Guernsey. A transaction effected by way of a scheme of arrangement is not subject to the proxy solicitation or tender offer rules under the US Securities Exchange Act of 1934 (the "US Exchange Act"). Accordingly, the Scheme will be subject to the disclosure requirements, rules and practices applicable in the UK and Guernsey to schemes of arrangement and takeover offers, which differ from the disclosure requirements, style and format of US tender offer and proxy solicitation rules. If Prospect determines to extend the offer into the US, the Offer will be made in compliance with applicable US laws and regulations. Financial information included in this Announcement and the Scheme Document has been or will have been prepared in accordance with non-US accounting standards that may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US. However, if Prospect were to elect to implement the Offer by means of a contractual offer, rather than the Scheme, such offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US

Exchange Act and Regulation 14E thereunder. Such offer would be made in the US by Prospect and no one else.

Neither the US Securities and Exchange Commission nor any securities commission of any state of the United States has approved or disapproved the Offer, nor have such authorities passed upon or determined the fairness of the Offer or the adequacy or accuracy of the information contained in this Announcement. Any representation to the contrary is a criminal offence in the United States.

If the Offer is required to be made in the US, it will be done in compliance with the applicable tender offer rules under the US Exchange Act.

Forward-looking statements

This Announcement may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Prospect and/or TPJF and certain plans and objectives of Prospect with respect thereto. These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements also often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning. These statements are based on assumptions and assessments made by Prospect and/or TPJF (as applicable) in light of their experience and perception of historical trends, current conditions, future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement. Prospect does not assume any obligation to update or correct the information contained in this Announcement (whether as a result of new information, future events or otherwise), except as required by the Panel, the Code or by applicable law.

Forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Announcement. Neither Prospect nor TPJF undertakes any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except to the extent legally required.

There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business and competitive environments, market and regulatory forces, future exchange and interest rates, changes in tax rates, and future business combinations or dispositions.

For a discussion of important factors which could cause actual results to differ from forward-looking statements in relation to the Prospect Group or the TPJF Group, refer to the annual report and accounts of the Prospect Group for the financial year ended 31 March 2016 and of the TPJF Group for the financial year ended 31 December 2016, respectively.

No profit forecasts, quantified financial benefit statements or estimates

No statement in this Announcement is intended, or is to be construed, as a profit forecast, profit estimate or quantified financial benefit statement for any period. No statement in this Announcement should be interpreted to mean that earnings per TPJF Share or earnings per Prospect Share for the current or future financial years would necessarily match or exceed the historical published earnings per TPJF Share or earnings per Prospect Share.

Dealing and Opening Position Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of the offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk , including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and availability of hard copies

This Announcement and the documents required to be published pursuant to Rule 26.1 of the Code will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on TPJF's website at www.prospectjapanfund.com by no later than 12.00 p.m. (London time) on the Business Day following this Announcement.

Neither the content of any website referred to in this Announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this Announcement.

You may request a hard copy of this Announcement by contacting TPJF's company secretary, Northern Trust International Fund Administration Services (Guernsey) Limited, on +44 (0) 1481 745 918. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

Electronic Communications

Please be aware that addresses, electronic addresses and certain other information provided by TPJF Shareholders, persons with information rights and other relevant persons for the receipt of communications from TPJF may be provided to Prospect during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Time

All times shown in this Announcement are London times, unless otherwise stated.

APPIX I

CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER

Part A: Conditions of the Scheme and the Offer

1. The Offer will be conditional upon the Scheme becoming unconditional and Effective, by no later than the Longstop Date or such later date (if any) as Prospect and TPJF may, with the consent of the Panel, agree and (if required) the Court may allow.

   2.         The Scheme will be subject to the following conditions: 

2.1

(i) the Court Meeting being held on or before the 22nd day after the expected date of the Court Meeting as set out in the Scheme Document (or such later date as may be agreed by Prospect and TPJF and which the Court may allow); and

(ii) the approval of the Scheme by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) who are present and voting, whether in person or by proxy, at the Court Meeting;

2.2

(i) the TPJF General Meeting being held on or before the 22nd day after the expected date of the TPJF General Meeting as set out in the Scheme Document (or such later date as may be agreed by Prospect and TPJF and which the Court may allow); and

(ii) all resolutions necessary to approve and implement the Scheme (including to approve the Sales Policy, the Termination Sales Policy, the Sales Request Policy and the appointment of TPJF as the Representative) being duly passed by the requisite majority of TPJF Shareholders at the TPJF General Meeting; and

2.3

(i) the Court hearing to sanction the Scheme being held on or before the 22nd day after the expected date of the Court sanction hearing as set out in the Scheme Document (or such later date as may be agreed by Prospect and TPJF and the Court may allow); and

(ii) the sanction of the Scheme by the Court, with or without modification (subject to any modification being on terms acceptable to TPJF and Prospect) and the delivery of a copy of the Court Order(s) to the Guernsey Registry.

3. In addition, subject as stated in Part B below and to the requirements of the Panel, the Offer will be conditional upon the following Conditions and, accordingly, the sanction of the Scheme by the Court will not be sought and the Court Order(s) will not be delivered to the Guernsey Registry unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

Prospect Shareholder Approval

(a) the passing at the Prospect ASM of a resolution to approve the issuance of the New Prospect Shares at a discount to the prevailing market price by at least two-thirds of the voting rights represented at the meeting at which at least one-third of the total number of voting rights attended;

Admission of the New Prospect Shares

(b) Prospect having taken all necessary actions (i.e., submission of an application for listing of the New Prospect Shares to the TSE by no later than three weeks prior to the Effective Date) so that the New Prospect Shares will be admitted to trading on the Tokyo Stock Exchange by no later than 14 days after the Effective Date;

Notifications, waiting periods and Authorisations

(c) other than in relation to the matters referred to in Conditions 1, 2 and 3(a) to (b) (inclusive), all material notifications, filings or applications which are necessary under any applicable legislation or regulation of any relevant jurisdiction in connection with the Offer having been made or will be made and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate), and all statutory and regulatory obligations in any jurisdiction having been complied with in each case in respect of the Offer and all Authorisations necessary in any jurisdiction for or in respect of the Offer and, except pursuant to Part XVIII of the Companies Law of Guernsey, the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, TPJF or any other member of the Wider TPJF Group by any member of the Wider Prospect Group having been obtained in terms and in a form reasonably satisfactory to Prospect from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider TPJF Group or the Wider Prospect Group has entered into contractual arrangements and all such Authorisations necessary to carry on the business of any member of the Wider TPJF Group in any relevant jurisdiction which is material in the context of the Wider TPJF Group taken as a whole having been obtained and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise Effective and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

General antitrust and regulatory

(d) other than in relation to the matters referred to in Conditions 1, 2 and 3(a) to (b) (inclusive), no antitrust regulator or Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) which would or might:

(i) require, prevent or materially delay the divestiture or alter the terms envisaged for such divestiture by any member of the Wider Prospect Group or by any member of the Wider TPJF Group of all or any part of its businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof);

(ii) except pursuant to Part XVIII of the Companies Law of Guernsey, require any member of the Wider Prospect Group or the Wider TPJF Group to acquire or offer to acquire a material number of shares, other securities (or the equivalent) or interest in any member of the Wider TPJF Group or any asset owned by any Third Party (other than in the implementation of the Offer), where such acquisition would be material in the context of the Wider TPJF Group taken as a whole;

(iii) impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Prospect Group directly or indirectly to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in TPJF or on the ability of any member of the Wider TPJF Group or any member of the Wider Prospect Group directly or indirectly to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Wider TPJF Group;

(iv) make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, TPJF by any member of the Wider Prospect Group void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise prevent or prohibit, restrict, restrain, or delay or otherwise interfere with the implementation of, or impose additional conditions or obligations with respect to, or otherwise challenge, impede, interfere with the Offer or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, TPJF by any member of the Wider Prospect Group; or

(v) impose any material limitation on the ability of any member of the Wider Prospect Group of any member of the Wider TPJF Group to conduct, integrate or co-ordinate all or any part of its business with all or any part of the business of any other member of the Wider Prospect Group and/or the Wider TPJF Group,

and all applicable waiting and other time periods (including any extensions thereof) during which any such antitrust regulator or Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer or the acquisition or proposed acquisition of any TPJF Shares or otherwise intervene having expired, lapsed or been terminated;

Certain matters arising as a result of any arrangement, agreement, etc.

(e) except as Disclosed, there being no provision of any arrangement, agreement, permit or other instrument to which any member of the Wider TPJF Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Offer or the acquisition or the proposed acquisition by any member of the Wider Prospect Group of any shares or other securities (or the equivalent) in TPJF or otherwise, would or might, to an extent which is material in the context of the Wider TPJF Group as a whole or material in the context of the Offer, result in:

(i) any monies borrowed by, or any other indebtedness, actual or contingent, of, or any grant available to, any member of the Wider TPJF Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or becoming capable of being withdrawn or inhibited;

(ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider TPJF Group or any such security interest (whenever created, arising or having arisen) becoming enforceable;

(iii) any such arrangement, agreement, permit or other instrument being terminated or being adversely modified or adversely affected or any obligation or liability arising or any adverse action being taken or arising thereunder;

(iv) the rights, liabilities, obligations or interests of any member of the Wider TPJF Group in or the business of any such member under any such arrangement, agreement, permit or instrument with any other person or body or firm or company (or any arrangement or arrangement relating to any such interests or business) being terminated, or adversely modified or affected;

(v) any member of the Wider TPJF Group ceasing to be able to carry on business under any name under which it presently carries on business;

(vi) the value of, or the financial or trading position or prospects of, any member of the Wider TPJF Group being prejudiced or adversely affected; or

(vii) the creation or acceleration of any liability (actual or contingent) by any member of the Wider TPJF Group other than trade creditors or other liabilities incurred in the ordinary course of business,

and no event having occurred which, under any provision of any arrangement, agreement, permit, or other instrument to which any member of the Wider TPJF Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would or could result in any of the events or circumstances as are referred to in Conditions 3(e)(i) to (vii) (inclusive);

TPJF Shareholder resolution

(f) no resolution of TPJF Shareholders in relation to any acquisition or disposal of assets or shares (or the equivalent thereof) in any undertaking or undertakings (or in relation to any merger, demerger, reconstruction, amalgamation or scheme) being passed at a meeting of TPJF Shareholders;

Certain events occurring since 31 December 2016

   (g)        except as Disclosed, no member of the Wider TPJF Group having since 31 December 2016: 

(i) issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue, of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of TPJF Shares out of treasury (except, where relevant, as between TPJF and wholly owned subsidiaries of TPJF or between the wholly owned subsidiaries of TPJF); -

(ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than dividends (or other distributions whether payable in cash or otherwise) lawfully paid or made by any wholly owned subsidiary of TPJF to TPJF or any of its wholly owned subsidiaries;

(iii) other than pursuant to the Offer (and except for transactions between TPJF and its wholly owned subsidiaries or between the wholly owned subsidiaries of TPJF and transactions in the ordinary course of business), implemented, effected, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition or disposal of assets or shares or loan capital;

(iv) (except for transactions between TPJF and its wholly owned subsidiaries or between the wholly owned subsidiaries of TPJF) disposed of, or transferred, mortgaged or created any security interest over any material asset or any right, title or interest in any material asset or authorised, proposed or announced any intention to do so, in each case other than in the ordinary course of business and to an extent which is material in the context of the Wider TPJF Group taken as a whole;

(v) (except for transactions between TPJF and its wholly owned subsidiaries or between the wholly owned subsidiaries of TPJF) issued, authorised or proposed or announced an intention to authorise or propose, the issue of or made any change in or to the terms of any debentures or become subject to any contingent liability or incurred or increased any indebtedness;

(vi) entered into or varied or authorised, proposed or announced its intention, other than in the ordinary course of business, to enter into or vary any material contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, unusual or onerous nature or magnitude or which is or which involves an obligation of a nature or magnitude which is reasonably likely to be restrictive on the business of any member of the Wider TPJF Group, in either case to an extent which is material in the context of the Wider TPJF Group taken as a whole;

(vii) entered into or varied the terms of, or made any offer (which remains open for acceptance) to enter into or vary the terms of any contract, service agreement, commitment or arrangement with any director of any member of the Wider TPJF Group, other than in the ordinary course of business;

(viii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, except in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(ix) waived, compromised or settled any claim, other than in the ordinary course of business, which is material in the context of the Wider TPJF Group as a whole;

(x) terminated or varied the terms of any agreement or arrangement between any member of the Wider TPJF Group and any other person in a manner which would or could have a material adverse effect on the financial position of the Wider TPJF Group taken as a whole;

   (xi)        made any alteration to its memorandum or articles of incorporation/association or other incorporation documents; 

(xii) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business; or

(xiii) (other than in respect of a member of the Wider TPJF Group which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of a receiver, administrator, manager, administrative receiver, trustee or similar officer of all or any material part of its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed; and

No adverse change, litigation, regulatory enquiry or similar

   (h)        except as Disclosed, since 31 December 2016 there having been: 

(i) no adverse change in the business, assets, financial or trading position or profits or prospects of any member of the Wider TPJF Group to an extent which is material in the context of the Wider TPJF Group taken as a whole;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings having been announced or instituted by or against or remaining outstanding against or in respect of, any member of the Wider TPJF Group, in each case to an extent which is material in the context of the Wider TPJF Group taken as a whole;

(iii) no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider TPJF Group having been threatened, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider TPJF Group, in each case to an extent which is material in the context of the Wider TPJF Group taken as a whole; and

(iv) no contingent or other liability having arisen or been incurred which might reasonably be expected to adversely affect any member of the Wider TPJF Group to an extent which is material in the context of the Wider TPJF Group taken as a whole.

Part B: Certain further terms of the Offer

1. To the extent permitted by law and subject to the requirements of the Panel, Prospect reserves the right to waive in whole or in part, but subject to the provisions of the Code, all or any of the above Conditions 3(c) to (h) (inclusive).

2. If Prospect is required by the Panel to make an offer for TPJF Shares under the provisions of Rule 9 of the Code, Prospect may make such alterations to any of the above Conditions and terms of the Offer as are necessary to comply with the provisions of that Rule.

3. The TPJF Shares acquired under the Offer shall be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the Effective Date.

4. Prospect will be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of Conditions 3 (c) to (h) (inclusive) by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

5. If, after the date of this Announcement but prior to the Effective Date, any dividend or other distribution is declared, paid or made or payable by TPJF, Prospect reserves the right (without prejudice to any right of Prospect), with the consent of the Panel, to invoke Condition 3(g)(ii) above) to reduce the consideration payable under the Offer in respect of a TPJF Share by making an adjustment to the Exchange Ratio so as to reduce the implied value under the terms of the Offer by an amount up to the amount of such dividend or distribution. If such reduction occurs, any reference in this Announcement to the Exchange Ratio will be deemed to be a reference to the Exchange Ratio as so reduced and, notwithstanding the terms on which the TPJF Shares are expressed to be acquired by Prospect pursuant to the Offer in Appendix I, the TPJF Shares will be acquired by or on behalf of Prospect pursuant to the Offer together with all rights now and hereafter attaching to such shares including the right to receive in full all dividends and other distributions (if any) declared, paid or made on or after the date of this Announcement. To the extent that such a dividend or distribution has been declared, paid, made or is payable or will be: (i) transferred pursuant to the Offer on a basis which entitles Prospect to receive the dividend or distribution and to retain it; or (ii) cancelled, the Exchange Ratio will not be subject to change in accordance with this paragraph. Any exercise by Prospect of its rights referred to in this paragraph will be the subject of an announcement and, for the avoidance of doubt, will not be regarded as constituting any revision or variation of the Offer.

6. Prospect reserves the right to elect (subject to the consent of the Panel and to the provisions of the Cooperation Agreement) to implement the acquisition of the TPJF Shares by way of a takeover offer (which shall be an offer for the purposes of section 337 of the Companies Law of Guernsey), as an alternative to the Scheme. In such an event, the acquisition will be implemented on substantially the same terms as those which would apply to the Scheme (subject to appropriate amendments, including an acceptance condition set at 75 per cent. in value of the shares to which such offer relates or such lesser percentage, being more than 50 per cent. in value, as Prospect may decide). Furthermore, if such offer is made and sufficient acceptances of such offer are received, Prospect reserves the right to apply the provisions of Part XVIII of the Companies Law of Guernsey to compulsorily acquire any outstanding TPJF Shares to which such offer relates.

7. The availability of the New Prospect Shares to persons not resident in Guernsey or the UK may be affected by the laws of the relevant jurisdictions. Persons who are not resident in Guernsey or the UK should inform themselves about and observe any applicable requirements. The New Prospect Shares to be issued pursuant to the Offer have not been and will not be registered under the US Securities Act, the FIEA nor under any of the relevant securities laws of any other Restricted Jurisdiction. Accordingly, the New Prospect Shares may not be offered, sold or delivered, directly or indirectly, in any Restricted Jurisdiction, except pursuant to exemptions from applicable requirements of any such jurisdiction.

8. The Offer is to be implemented by means of a Court-sanctioned scheme of arrangement between TPJF and the TPJF Shareholders under Part VIII of the Companies Guernsey Law, 2008, as amended, and the Scheme is subject to the jurisdiction of the courts and to the Conditions and further terms set out in this Appendix I and to be set out in the Scheme Document. The Offer will also be subject to the applicable requirements of the Companies Law of Guernsey, the Court (as a result of TPJF being incorporated in Guernsey) and the GFSC (as a result of TPJF being an authorised closed ended investment scheme in Guernsey), the applicable requirements of English law, the Code, the Panel, the London Stock Exchange and the FCA (as a result of TPJF being listed on the London Stock Exchange) and the applicable requirements of Japanese laws, JASDEC, the Tokyo Stock Exchange and the Japanese Financial Services Agency (as a result of Prospect being a Japanese company, listed on the Tokyo Stock Exchange).

9. The New Prospect Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing Prospect Shares at the time the New Prospect Shares are issued, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling after the date on which the Scheme becomes Effective.

10. Fractions of the New Prospect Shares will not be allotted or issued to the TPJF Shareholders. Fractional entitlements will instead be aggregated and sold to Prospect and the net proceeds shall be contributed towards the costs of the settlement arrangements for the Offer.

11. Under Rule 13.5 of the Code, Prospect may not invoke a condition to the Offer so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to Prospect in the context of the Offer. Conditions 1, 2 and 3(a) to (b) (inclusive) are not subject to this provision of the Code.

APPIX II

SOURCES OF INFORMATION AND BASES OF CALCULATION

   1.         The value attributed to the Offer is based on: 

(a) The value of Yen70.50 per Prospect Share, being the middle market closing price on the Tokyo Stock Exchange on 30 May 2017 (being the last dealing day prior to the date of this Announcement) and applying an exchange rate of 111.03 Yen/US$;

   (b)        multiplying by the number of TPJF Shares in issue, being 92,352,602; and 
   (c)        multiplying by the Exchange Ratio. 

2. Unless otherwise stated all prices and closing prices for TPJF Shares are closing middle market quotations derived from the London Stock Exchange Daily Official List.

3. Unless otherwise stated all prices and closing prices for Prospect Shares are closing prices derived from Bloomberg.

4. Unless otherwise stated all exchange rates are the average of the "best ask" and "best bid" Yen/US$ cross rate sourced from Bloomberg on 30 May 2017 (being the last Business Day prior to this Announcement).

5. Volume weighted average prices are calculated using middle market closing prices and volumes derived from Capital IQ for the time periods stipulated.

6. Prospect's market capitalisation is calculated by multiplying the Existing Prospect Share Capital by Yen70.50 per Prospect Share, being the middle market closing price on the Tokyo Stock Exchange on 30 May 2017 (being the last Business Day prior to the date of this Announcement) and applying an exchange rate of 111.03 Yen/US$).

7. Unless otherwise stated, the financial information relating to TPJF is extracted or derived (without any adjustment) from the results of TPJF for the financial year to 31 December 2016, prepared in accordance with IFRS.

8. Unless otherwise stated, the financial information relating to Prospect is extracted or derived (without any adjustment) from the audited financial information of the Prospect Group for the financial year to 31 March 2016 and the unaudited financial information of the Prospect Group for the financial year ended 31 March 2017 (reviewed and published pursuant to the Companies Act of Japan) and available on TPJF's website, www.prospectjapanfund.com.

9. TPJF's NAV per share is derived from a TPJF announcement on 26 May 2017 and includes a holding in Prospect's stock acquisition rights ('SARs') at par. For information purposes only, the announcement also included an alternative NAV per share figure, with the SARs being 'fair valued' using the Black-Scholes-Merton model in line with its annual financial statements, which results in an uplift of approximately US$9.15 million, increasing the total NAV to US$123.56 million which, when divided by the number of TPJF Shares in issue (as stated in 1(b) above), derives an alternative value for NAV per share of US$1.3380.

APPIX III

LETTERS OF INTENT AND IRREVOCABLE UNDERTAKINGS

TPJF Shareholders' Letters of Intent

Each of the following TPJF Shareholders have entered into letters of intent with Prospect to vote in favour of the resolutions to be proposed at the TPJF General Meeting and the Court Meeting (or if applicable to accept an offer), as follows:

 
                             Number of TPJF Shares 
                               in respect of which    Percentage of 
                               letter of intent is    TPJF's issued 
 Name of TPJF Shareholder                    given    share capital 
 Lazard Asset Management 
  Limited                               23,293,778           25.22% 
                            ----------------------  --------------- 
 1607 Capital Partners                  17,997,489           19.49% 
                            ----------------------  --------------- 
 Weiss Asset Management 
  LP                                     8,370,506            9.06% 
                            ----------------------  --------------- 
 South Yorkshire Pensions 
  Authority                              4,540,000            4.92% 
                            ----------------------  --------------- 
 Wells Capital Management                3,995,179            4.33% 
                            ----------------------  --------------- 
 Total:                                 58,196,952           63.02% 
                            ----------------------  --------------- 
 

Prospect Directors' Irrevocable Undertakings

Each of the following Prospect Directors have entered into irrevocable undertakings with TPJF to vote in favour of the resolutions to be proposed at the Prospect ASM, as follows:

 
                                 Number of Prospect 
                                  Shares in respect   Percentage of Prospect's 
                               of which undertaking       issued share capital 
 Name of Prospect Director                 is given           outside treasury 
 Curtis Freeze                              108,824                     0.064% 
                             ----------------------  ------------------------- 
 Masato Tabata                               71,706                     0.042% 
                             ----------------------  ------------------------- 
 Total:                                     180,530                     0.106% 
                             ----------------------  ------------------------- 
 

These irrevocable undertakings cease to be binding if:

-- the Scheme is withdrawn or lapses in accordance with its terms; or

-- TPJF announces that it will recommend a competing offer for TPJF; or

-- the resolutions to be proposed at the Prospect ASM (which are necessary to approve the issuance of the New Prospect Shares and therefore also to implement and effect the Offer) are duly passed, without any material amendment, on or before the 22nd day after the date for the ASM set out in the Scheme Document (or such later date as may be agreed between Prospect and TPJF); or

-- Prospect announces, with the consent of the Panel, that it does not intend to proceed with the Offer, the Scheme is withdrawn or any competing offer for TPJF is made which is declared wholly unconditional or otherwise becomes Effective; and

-- in any event by 30 September 2017.

APPIX IV

DEFINITIONS

The following definitions apply throughout this Announcement unless the context requires otherwise:

 
 "Announcement"                          this announcement including its appendices; 
 "Appendices"                            the appendices to this Announcement; 
 "Authorisations"                        regulatory authorisations, orders, 
                                          recognitions, grants, consents, clearances, 
                                          confirmations, certificates, licences, 
                                          permissions or approvals; 
 "Authorised Rules"                      The Authorised Closed-Ended Investment 
                                          Scheme Rules 2008; 
 "Bloomberg"                             Bloomberg L.P., a financial software 
                                          services, news and data company; 
 "Board"                                 the board of directors of Prospect 
                                          or TPJF (as applicable) with the terms 
                                          "Prospect Board" and "TPJF Board" 
                                          being construed accordingly; 
 "Business Day"                          a day (other than Saturdays, Sundays 
                                          and public holidays in London, Guernsey 
                                          and/or Tokyo, as applicable) on which 
                                          banks are open for general commercial 
                                          business; 
 "Capital IQ"                            S&P Capital IQ, a part of McGraw Hill 
                                          Financial Inc.; 
 "certificated" or "in                   the description of a share or other 
  certificated form"                      security which is not in uncertificated 
                                          form (that is, not in CREST); 
 "Code"                                  the City Code on Takeovers and Mergers 
                                          in the UK; 
 "Combined Group"                        the combined TPJF Group and Prospect 
                                          Group following completion of the 
                                          Offer; 
 "Companies Act of Japan"                The Companies Act of Japan, enacted 
                                          in May 2006; 
 "Companies Law of Guernsey"             The Companies (Guernsey) Law, 2008 
                                          (as amended); 
 "Conditions"                            the conditions to the implementation 
                                          of the Offer, as set out in Appendix 
                                          I to this Announcement and to be set 
                                          out in the Scheme Document; 
 "Court"                                 the Royal Court of Guernsey; 
 "Court Meeting"                         the meeting of Scheme Shareholders 
                                          to be convened pursuant to an order 
                                          of the Court under section 107 of 
                                          the Companies Law of Guernsey for 
                                          the purpose of considering and, if 
                                          thought fit, approving the Scheme 
                                          (with or without modifications), including 
                                          any adjournment thereof; 
 "Court Order(s)"                        the order(s) of the Court sanctioning 
                                          the Scheme; 
 "CREST"                                 the computerised settlement system 
                                          (as defined in the CREST Regulations) 
                                          operated by Euroclear UK & Ireland 
                                          Limited which facilitates the transfer 
                                          of title to shares in uncertificated 
                                          form; 
 "CREST Regulations"                     the Uncertificated Securities (Guernsey) 
                                          Regulations, 2009, including (i) any 
                                          enactment or subordinate legislation 
                                          which amends or supersedes those regulations 
                                          and (ii) any applicable rules made 
                                          under those regulations or any such 
                                          enactment or subordinate legislation 
                                          for the time being in force; 
 "Daily Official List"                   the Daily Official List published 
                                          by the London Stock Exchange; 
 "Dealing Disclosure"                    has the same meaning as in Rule 8 
                                          of the Code; 
 "Disclosed"                             the information disclosed by, or on 
                                          behalf of TPJF, (i) in the audited 
                                          results of the TPJF Group for the 
                                          financial year ended 31 December 2016; 
                                          (ii) in the annual report and accounts 
                                          of the TPJF Group for the financial 
                                          year ended 31 December 2016; (iii) 
                                          in this Announcement; (iv) in any 
                                          other announcement to a Regulatory 
                                          Information Service by, or on behalf 
                                          of TPJF prior to the publication of 
                                          this Announcement; or (v) as otherwise 
                                          fairly disclosed to Prospect (or its 
                                          respective officers, employees, agents 
                                          or advisers) prior to the date of 
                                          this Announcement; 
 "Effective"                             in the context of the Offer: 
                                          (i) if the Offer is implemented by 
                                          way of Scheme, means the Scheme having 
                                          become effective pursuant to its terms; 
                                          or 
                                          (ii) if the Offer is implemented by 
                                          way of a takeover offer, such offer 
                                          having become or been declared unconditional 
                                          in all respects in accordance with 
                                          its terms; 
 "Effective Date"                        the date on which the Scheme becomes 
                                          Effective in accordance with its terms; 
 "Exchange Ratio                         2.5 New Prospect Shares for each TPJF 
                                          Share; 
 "Excluded Share"                        any TPJF Share which is registered 
                                          in the name of or beneficially owned 
                                          by any member of the Prospect Group 
                                          at the Scheme Record Time; 
 "Existing Prospect Share                the existing issued ordinary share 
  Capital"                                capital in Prospect, excluding those 
                                          held in Treasury by Prospect, comprising 
                                          169,783,473 shares as at 30 May 2017 
                                          (being the latest practicable date 
                                          prior to the publication of this Announcement); 
 "FCA" or "Financial Conduct             the Financial Conduct Authority acting 
  Authority"                              in its capacity as the competent authority 

                                          for the purposes of Part VI of the 
                                          UK Financial Services and Markets 
                                          Act 2000 (as amended); 
          "Fiduciary"                             Equiniti Financial Services Limited, 
                                                   a private limited company incorporated 
                                                   in England and Wales, with its registered 
                                                   address at Aspect House, Spencer Road, 
                                                   Lancing, West Sussex BN99 8AH and 
                                                   with company number 06208699; 
          "FIEA"                                  the Financial Instruments and Exchange 
                                                   Act (Act No. 25 of 1948, as amended) 
                                                   of Japan; 
          "Form A"                                a JASDEC settlement form; 
          "Form B"                                a sub-account opening form; 
          "Forms of Proxy"                        the forms of proxy in connection with 
                                                   each of the Court Meeting and the 
                                                   TPJF General Meeting, which will accompany 
                                                   the Scheme Document; 
          "FSAJ"                                  the Commissioner of the Financial 
                                                   Services Agency of Japan; 
          "GFSC"                                  the Guernsey Financial Services Commission; 
          "Guernsey"                              the Island of Guernsey; 
          "Guernsey Registry"                     the body authorised by the states 
                                                   of Guernsey to maintain various registers 
                                                   as required under Guernsey legislation 
                                                   and operation under the name Guernsey 
                                                   Registry; 
          "IFRS"                                  International Financial Reporting 
                                                   Standards as adopted by the European 
                                                   Union; 
          "Independent TPJF Directors"            the independent directors of TPJF, 
                                                   as at the date of this Announcement, 
                                                   namely, John Hawkins and Richard Battey; 
          "Japan"                                 the sovereign state of Japan (Nippon-koku); 
          "Japanese Securities Laws"              Japanese securities laws (Financial 
                                                   Instruments and Exchange Act); 
 "JASDEC"                                Japan Securities Depository Center, 
                                          Inc.; 
 "Listing Rules"                         the rules and regulations made by 
                                          the Financial Conduct Authority in 
                                          its capacity as the competent authority 
                                          under Part VI of the Financial Services 
                                          and Markets Act 2000 (as amended), 
                                          and contained in the UKLA's publication 
                                          of the same name; 
 "London Stock Exchange"                 London Stock Exchange plc; 
 "Longstop Date"                         30 September 2017; 
 "Main Market"                           the main market of the London Stock 
                                          Exchange; 
 "Meetings"                              the Court Meeting and the TPJF General 
                                          Meeting; 
 "Mizuho"                                Mizuho Bank, Ltd. (Corporate Advisory 
                                          department); 
 "mW"                                    megawatt, a unit of power equal to 
                                          one million watts; 
 "NAV"                                   net asset value; 
 "New Prospect Shares"                   the new Prospect Shares proposed to 
                                          be allotted and issued to TPJF Shareholders 
                                          in connection with the Offer, being 
                                          230,881,505 shares; 
 "No Action Shareholders"                has the meaning give in paragraph 
                                          15.3(c) of this Announcement; 
 "No Action Sub-Account"                 has the meaning give in paragraph 
                                          15.3(c) of this Announcement; 
 "Offer"                                 the recommended share for share exchange 
                                          offer being made by Prospect to acquire 
                                          the entire issued and to be issued 
                                          ordinary share capital of TPJF to 
                                          be implemented by means of the Scheme 
                                          and, where the context admits, any 
                                          subsequent revision, variation, extension 
                                          or renewal thereof; 
 "Offer Period"                          the offer period (as defined by the 
                                          Code) relating to TPJF, which commenced 
                                          on 10 January 2017 which and will 
                                          end on the Effective Date; 
 "Official List"                         the official list maintained by the 
                                          UKLA pursuant to Part VI of the Financial 
                                          Services and Markets Act 2000; 
 "Opening Position Disclosure"           an announcement pursuant to Rule 8 
                                          of the Code containing details of 
                                          interests or short positions in, or 
                                          rights to subscribe for, any relevant 
                                          securities of a party to an offer; 
 "Overseas Shareholders"                 TPJF Shareholders (or nominees of, 
                                          or custodians or trustees for TPJF 
                                          Shareholders) not resident in, or 
                                          nationals or citizens of, the UK; 
 "POI Law"                               The Protection of Investors (Guernsey) 
                                          Law, 1987, as amended; 
 "Panel"                                 the Panel on Takeovers and Mergers 
                                          in the UK; 
 "PAM(CI)"                               Prospect Asset Management (Channel 
                                          Islands) Ltd., a Guernsey registered 
                                          investment manager; 
 "PAMI"                                  Prospect Asset Management, Inc.; 
 "Prospect"                              Prospect Co., Ltd.; 
 "Prospect ASM"                          the annual shareholders meeting of 
                                          Prospect Shareholders to be held in 
                                          the last week of June 2017; 
 "Prospect Directors"                    the directors of Prospect; 
 "Prospect Group"                        Prospect and its subsidiaries and, 
                                          where the context permits, each of 
                                          them; 
 "Prospect Shareholders"                 the holders of Prospect Shares; 
 "Prospect Shares"                       the allotted and issued and fully 
                                          paid ordinary shares in the capital 
                                          of Prospect; 
 "Receiving Agent"                       Equiniti Limited, a private limited 
                                          company incorporated in England and 
                                          Wales, with its registered address 
                                          at Aspect House, Spencer Road, Lancing, 
                                          West Sussex BN99 8AH and with company 
                                          number 06226088; 
 "Regulatory Information                 a primary information provider which 
  Service"                                has been approved by the FCA to disseminate 
                                          regulated information; 
 "Representative"                        the representative of the No Action 
                                          Shareholders for the purposes of the 
                                          settlement arrangements described 
                                          in paragraph 15 of this Announcement 
                                          and in relation to which further details 
                                          will be provided in the Scheme Document; 
 "Restricted Jurisdiction"                any jurisdiction where the extension 
                                           or availability of the Offer to TPJF 
                                           Shareholders generally in such jurisdiction 
                                           would contravene any applicable law, 
                                           including, without limitation, Australia, 
                                           Japan, the Republic of South Africa 
                                           and the United States; 
 "Restricted Overseas Person"             TPJF Shareholders resident in, or 

                                           nationals or citizens of, Restricted 
                                           Jurisdictions or who are nominees 
                                           or custodians, trustees or guardians 
                                           for, citizens, residents or nationals 
                                           of such Restricted Jurisdictions; 
 "RNS Reach"                              an investor communication service 
                                           allowing listed, unlisted and non-UK 
                                           companies to distribute non-regulatory 
                                           news releases into the public domain; 
 "Sales Agent"                            PAMI in its capacity as sales agent 
                                           for the purposes of the settlement 
                                           arrangements described in paragraph 
                                           15 and in relation to which further 
                                           details will be provided in the Scheme 
                                           Document; 
 "Sales Policy"                           the sales policy referred to in paragraph 
                                           15.3(c) with respect to the sales 
                                           process to be undertaken by the Sales 
                                           Agent on behalf of the No Action Shareholders 
                                           and in relation to which further details 
                                           will be provided in the Scheme Document; 
 "Sales Request Policy"                   the policy referred to in paragraph 
                                           15.3(b) on the sales process to be 
                                           undertaken by the Sales Agent on behalf 
                                           of the TPJF Shareholders who have 
                                           timely and validly submitted the Form 
                                           B and on whose behalf New Prospect 
                                           Shares are held by the Fiduciary. 
                                           Further details in relation to this 
                                           policy will be provided in the Scheme 
                                           Document; 
 "SARS"                                   the stock acquisition rights; 
 "SESC"                                   the Securities and Exchange Surveillance 
                                           Commission of Japan; 
 "Scheme"                                 the proposed scheme of arrangement 
                                           under Part VIII of the Companies Law 
                                           of Guernsey as amended between TPJF 
                                           and the Scheme Shareholders in connection 
                                           with the Offer, with or subject to 
                                           any modification, addition or condition 
                                           approved or imposed by the Court and 
                                           agreed by TPJF and Prospect; 
 "Scheme Document"                        the document to be sent to TPJF Shareholders 
                                           containing, among other things, the 
                                           Scheme, an explanatory statement in 
                                           compliance with Part VIII of the Companies 
                                           Law of Guernsey and the notices convening 
                                           the Court Meeting and the TPJF General 
                                           Meeting; 
 "Scheme Record Time"                     the date and time to be specified 
                                           in the Scheme Document by reference 
                                           to which the Scheme will be binding 
                                           on the holders of TPJF Shares; 
 "Scheme Shareholders"                    the holders of Scheme Shares; 
 "Scheme Shares"                          the TPJF Shares: 
                                           (i) in issue at the date of the Scheme 
                                           Document and which remain in issue 
                                           at the Scheme Record Time; 
                                           (ii) if any, issued after the date 
                                           of the Scheme Document but before 
                                           the Scheme Voting Record Time and 
                                           which remain in issue at the Scheme 
                                           Record Time; and 
                                           (iii) if any, issued at or after the 
                                           Scheme Voting Record Time but at or 
                                           before the Scheme Record Time on terms 
                                           that the original or any subsequent 
                                           holders thereof are, or shall have 
                                           agreed in writing, to be bound by 
                                           the Scheme and, in each case, which 
                                           remain in issue at the Scheme Record 
                                           Time, 
                                           in each case, other than any Excluded 
                                           Shares; 
 "Scheme Voting Record                    the date and time to be specified 
  Time"                                    in the Scheme Document by reference 
                                           to which entitlement to vote at the 
                                           Court Meeting will be determined, 
                                           expected to be 6.00 p.m. (London time) 
                                           on the day which is two days before 
                                           the Court Meeting or, if the Court 
                                           Meeting is adjourned, 6.00 p.m. (London 
                                           time) on the day which is two days 
                                           before the date of such adjourned 
                                           Court Meeting; 
 "Settlement Date"                        the date which will be specified as 
                                           such in the Scheme Document, or such 
                                           other date as may be agreed between 
                                           Prospect and TPJF, being no later 
                                           than 14 days after the Effective Date; 
 "Significant Interest"                   in relation to an undertaking, a direct 
                                           or indirect interest of 20 per cent. 
                                           or more of the total voting rights 
                                           conferred by the equity share capital 
                                           of such undertaking; 
 "Stockdale"                              Stockdale Securities Limited; 
 "Strand Hanson"                         Strand Hanson Limited; 
 "Termination Sales Policy"              the termination sales policy referred 
                                          to in paragraph 15.3(b) of this Announcement 
                                          with respect to the sales process 
                                          to be undertaken by the Sales Agent 
                                          on behalf of those TPJF Shareholders 
                                          on whose behalf any New Prospect Shares 
                                          are still held on their behalf by 
                                          the Fiduciary, on the date which is 
                                          two years following the Settlement 
                                          Date. Further details in relation 
                                          to this policy will be provided in 
                                          the Scheme Document; 
 "Third Party"                           each of a central bank, government 
                                          or governmental, quasi-governmental, 
                                          supranational, statutory, regulatory, 
                                          environmental, administrative, fiscal 
                                          or investigative body, court, trade 
                                          agency, association, institution, 
                                          environmental body, any other body 
                                          or person whatsoever in any jurisdiction; 
 "Tokyo Stock Exchange"                  Tokyo Stock Exchange, Inc.; 
  or "TSE" 
 "TPJF" or "Company"                     The Prospect Japan Fund Limited; 
 "TPJF Directors"                        the board of directors of TPJF, as 
                                          at the date of this Announcement; 
 "TPJF General Meeting"                  the general meeting of TPJF Shareholders 
                                          (including any adjournment thereof) 
                                          to be convened in connection with 
                                          the Scheme; 
 "TPJF Group"                            TPJF and its subsidiaries and, where 
                                          the context permits, each of them; 
 "TPJF Shareholders" or                  the holders of TPJF Shares; 
  "Shareholders" 
 "TPJF Shares"                           the existing unconditionally allotted 
                                          and issued and fully paid ordinary 

                                          shares of US$0.001 each in the capital 
                                          of TPJF and any further such ordinary 
                                          shares which are unconditionally allotted 
                                          or issued before the Scheme becomes 
                                          Effective; 
 "UKLA"                                  the UK Listing Authority, being the 
                                          Financial Conduct Authority acting 
                                          in its capacity as the competent authority 
                                          for the purposes of Part VI of the 
                                          Financial Services and Markets Act 
                                          2000 (as amended); 
 "UK"                                    the United Kingdom of Great Britain 
                                          and Northern Ireland; 
 "UK Companies Act"                      The Companies Act 2006, as amended 
                                          from time to time; 
 "United States" or "US"                 the United States of America, its 
                                          territories and possessions, any state 
                                          of the United States of America, the 
                                          District of Columbia and all other 
                                          areas subject to its jurisdiction 
                                          and any political sub-division thereof; 
 "US Exchange Act"                       the US Securities Exchange Act of 
                                          1934; 
 "US Securities Act"                     the US Securities Act of 1933; 
 "Wider Prospect Group"                  Prospect and its associated companies 
                                          and any other body corporate, partnership, 
                                          joint venture or person in which Prospect 
                                          and all such associated companies 
                                          (aggregating their interests) have 
                                          a Significant Interest; and 
 "Wider TPJF Group"                      TPJF Group and its associated companies 
                                          and any other body corporate, partnership, 
                                          joint venture or person in which any 
                                          member of the TPJF Group and such 
                                          associated companies (aggregating 
                                          their interests) have a Significant 
                                          Interest. 
 

For the purposes of this Announcement "subsidiary" and "associates" have the meanings given by the UK Companies Act.

All references to "GBP", "pounds", "pounds Sterling", "Sterling", "GBP", "pence", "penny" and "p" are to the lawful currency of the United Kingdom.

All references to "US$" and "$" are to the lawful currency of the United States.

All references to "Japanese Yen", "JPY" and "Yen" are to the lawful currency of Japan.

All the times referred to in this Announcement are London times unless otherwise stated.

References to the singular include the plural and vice versa.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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(END) Dow Jones Newswires

May 31, 2017 05:00 ET (09:00 GMT)