Tokyo Lifestyle Enters into US$1.92 Million Subordinated Unsecured Loan Agreement with Tokushin G. K.

Core Viewpoint - Tokyo Lifestyle Co., Ltd. has entered into a five-year subordinated unsecured loan agreement for JPY 300 million (approximately US$1.92 million) with its controlling shareholder to support future growth and development initiatives [1][2]. Group 1: Loan Agreement Details - The loan proceeds were received on February 1, 2026, with a maturity date of January 31, 2031, and a fixed annual interest rate of 2.0% [2]. - Repayment will occur according to a mutually agreed schedule, with monthly interest payments and a lump sum principal repayment at maturity [2]. Group 2: Financial Structure and Implications - The subordinated loan ranks below other forms of indebtedness, meaning it is repaid only after senior debts in the event of default, thus not diluting shareholders' equity [3]. - This loan is viewed as 'quasi-capital' and is expected to strengthen the company's capital base and enhance its credit profile, potentially facilitating access to lower-cost senior financing in the future [6]. Group 3: Business Strategy and Expansion Plans - Tokyo Lifestyle is advancing its global expansion strategy, focusing on establishing a network of direct-operated stores, franchise locations, online platforms, and wholesale customers [4]. - The company plans to open new stores in Japan, Hong Kong, the U.S., Vietnam, Australia, and Canada, as well as franchise stores in various countries over the next three years, requiring stronger financial support [7]. Group 4: Management Perspective - The controlling shareholder expressed confidence in the company's business model and management capabilities, viewing the loan as a significant optimization of the capital structure [5]. - The funding is primarily intended to support long-term growth objectives rather than immediate liquidity needs, aligning with the interests of all shareholders [8].