Notice of Occurrence of Financial Covenant (Temporary Increase in Working Capital due to Inventory Increase)

Key Points

Akebono Brake Industry Co., Ltd. announced that it confirmed the occurrence of events under a loan agreement subject to financial covenants as of 2026-11-12. The cause is an increase in inventories due to stock buildup after consolidating to a single U.S. plant and a temporary increase in working capital to respond to the abolition of bills of exchange following the enforcement of the Act on Promotion of Proper Transactions in Small and Medium-sized Subcontracting. For the related periods ending 2026-09-30 and 2026-12-31, the company has obtained agreements to waive rights and states there is currently no material impact on liquidity. The company plans to reduce inventory and normalize working capital from the fiscal year ending March 2027.

Outlook and Impact

The agreement to waive rights for the related periods has been obtained, and at this time no material impact on liquidity or business continuity is recognized. In the long term, the company will proceed with phased reduction of North American inventory and normalization of working capital; no impact on consolidated earnings guidance for the fiscal year ending March 2027 has been mentioned. The primary cause is a temporary adjustment, and the company will continue measures to ensure financial soundness.