Subordinated capital loan introduced to Japan Philharmonic Orchestra
Introduction of Subordinated Capital Loans
| Subordinated capital loan overview Lender: Shoko Chukin Bank (Fukutoshin Sales Department) Amount: 2 million yen Term: 10 years Repayment: Lump sum repayment at maturity Conditions: Unsecured, unguaranteed |
The Japan Philharmonic Orchestra has suffered a major financial blow due to the impact of COVID-19. Approximately 70 performances, half of the scheduled annual performances, have been canceled. Subsequent restrictions have dramatically reduced performance revenues, making it difficult for the orchestra to return to normal even next season. In light of these circumstances, we urgently need to quickly restore our severely damaged balance sheet, secure stable funding for activities this fiscal year and beyond, and build a strong financial base capable of adapting to social changes, in order to ensure the continuity of our operations. To this end, we considered taking out a subordinated capital loan, and we have now received a 200 million yen loan from the Shoko Chukin Bank. This was made possible thanks to the Shoko Chukin Bank's deep understanding of the orchestra's musical activities and management. We would like to express our sincere gratitude to Mitsubishi UFJ Bank and Resona Bank for their support through emergency loans, as well as to everyone who has provided their understanding and support in introducing this loan.
Although subordinated capital loans are liabilities, they are considered equity capital by financial institutions, allowing companies to avoid insolvency and create the conditions for receiving loans, making them an excellent system for corporate revitalization in emergencies. This is the first time that this loan has been applied to a public interest corporation, and it will not only ensure the business continuity of the Japan Philharmonic Orchestra, a public interest incorporated foundation, but will also be a major help in stabilizing management in the future. It could also be said that this opens a new path for many cultural and arts organizations certified as public interest corporations to survive even in the face of unforeseen difficulties such as a major disaster.
However, although subordinated capital loans are considered to be equity capital in transactions with financial institutions, they are not currently considered to be net assets in the accounting standards of public interest corporations. We would like to appeal to all parties in the future to have subordinated capital loans recognized as net assets.
The introduction of the subordinated capital loan will create an environment in which we can further strengthen our artistic and social responsibilities. While pursuing our artistic responsibilities as one of Japan's leading orchestras, we will further enhance our various musical activities for society, including support for the disaster-stricken areas of the Tohoku region (299 events in total), music appreciation classes for elementary and junior high schools, on-site performances at schools, activities for people with disabilities and cancer patients, orchestral performances across Kyushu in collaboration with local residents (a 46-year tradition), and summer vacation concerts enjoyed by three generations. We will also explore new roles and possibilities for the orchestra in society and devote our full efforts to these endeavors.
We appreciate your continued understanding and cooperation with the Japan Philharmonic Orchestra.
Shoko Chukin Bank press release
https://www.shokochukin.co.jp/assets/pdf/nr_201221_02.pdf
