Financial Covenant and Interest Rate Increase Risks Related to Acquisition Financing
First written in FY2021-Q3. 5 of 17 entries say "Mitigated", first in FY2022. Latest entry: 2026-10-23.
The whole theme swung hardest in 2025: 23 of 75 companies on the "Worse" side.
28 other companies' latest entry also says "Mitigated".
- 2026-10-23MitigatedEarnings presentation
「有利子負債の返済が進んだことで自己資本比率も 32.9%（2026 年 2 月末：25.5%）に改善しており、高収益かつ筋肉質な財務体質へのシフトが順調に進んでおります。」
有利子負債の返済進展と自己資本比率の改善により、買収資金借入等に伴う財務エクスポージャーが低減方向にあることを記載している。 - FY2027-H1MitigatedAnnual report
「Liabilities at the end of the current interim consolidated accounting period were ¥3,640.833 million, a decrease of ¥1,613.98 million from the end of the previous consolidated fiscal year. The main factors were a ¥243.004 million decrease in short-term borrowings and a ¥1,084.227 million decrease in long-term borrowings, including the portion due within one year.」
Liabilities decreased by ¥1,613.98 million from the end of the previous consolidated fiscal year due to decreases in short-term and long-term borrowings. The company describes a reduction in financial exposure related to acquisition financing and other borrowings. - 2026-07-14MitigatedEarnings presentation
「Interest-bearing debt was substantially reduced through the carve-out of JAPANDX and JDX Solutions.」
The carve-out reduced interest-bearing debt from ¥3.7 billion to ¥3.0 billion, indicating lower borrowing-related risk. The canonical thread is unchanged. - FY2026MitigatedAnnual report
「Of the long-term borrowings, including the portion due within one year, as of 28 February 2026, ¥225 million is subject to financial covenants requiring the company, consolidated subsidiary AIK and consolidated subsidiary And Security each to maintain cash flow at a specified level in their respective separate income statements.」
Borrowings related to AIK and And Security subject to financial covenants decreased from ¥300 million in the previous year to ¥225 million. The provision for a 0.40% interest-rate increase upon breach remains in place. - FY2026-H1Interim borrowings and repayments updatedAnnual report
「The main factor was an increase resulting from ¥705 million in proceeds from long-term borrowings, partly offset by a ¥313.672 million decrease in net changes in short-term borrowings and ¥708.089 million in repayments of long-term borrowings.」
During the interim period, the company drew ¥705 million in long-term borrowings, reduced short-term borrowings by ¥313.672 million, and repaid ¥708.089 million in long-term borrowings. - FY2025WorsenedAnnual report
「Of the long-term borrowings, including the portion due within one year, as of 28 February 2025, ¥315 million is subject to financial covenants requiring JAPANDX Co., Ltd. to maintain its net assets as shown in its separate balance sheet and cash flow as shown in its separate income statement at specified levels. If the covenants are breached, the borrowing rate will increase by 0.50% at the lender's request.」
The company disclosed new financial covenants on ¥315 million of long-term borrowings related to JAPANDX, requiring maintenance of net assets and cash flow, together with a 0.50% interest-rate increase upon breach. - FY2025-H1Increase in long-term borrowingsAnnual report
「Liabilities at the end of the current interim consolidated accounting period were ¥4,560.335 million, an increase of ¥272.198 million from the end of the previous consolidated fiscal year. The main factors were a ¥91.6 million decrease in short-term borrowings, a ¥212.006 million increase in long-term borrowings, and a ¥148.019 million increase in accounts payable and other liabilities.」
Liabilities at the end of the interim period were ¥4,560.335 million, with long-term borrowings increasing by ¥212.006 million. The company disclosed changes in its financial position, including increased borrowing exposure related to acquisitions and other factors. - FY2025-Q1Increase in long-term borrowingsAnnual report
「Liabilities at the end of the first quarter consolidated accounting period were ¥4,347.844 million, an increase of ¥59.706 million from the end of the previous consolidated fiscal year. The main factors were a ¥29.974 million decrease in accounts payable and a ¥91.103 million increase in long-term borrowings.」
Liabilities at the end of the first quarter increased by ¥59.706 million from the end of the previous consolidated fiscal year, primarily due to a ¥91.103 million increase in long-term borrowings. - FY2024-Q3Third-quarter increase in borrowings and liabilitiesAnnual report
「Liabilities at the end of the third quarter consolidated accounting period were ¥4,320.183 million, an increase of ¥654.796 million from the end of the previous consolidated fiscal year. The main factors were increases of ¥378.6 million in short-term borrowings, ¥153.389 million in long-term borrowings due within one year, and ¥111.915 million in long-term borrowings.」
Liabilities at the end of the third quarter were ¥4,320.183 million, an increase of ¥654.796 million from the end of the previous consolidated fiscal year. The company cited increases in short-term borrowings, long-term borrowings due within one year and long-term borrowings as the factors. - FY2024-Q2Increase in borrowingsAnnual report
「Liabilities at the end of the second quarter consolidated accounting period were ¥4,285.522 million, an increase of ¥620.135 million from the end of the previous consolidated fiscal year. The main factors were increases of ¥416.4 million in short-term borrowings and ¥172.946 million in long-term borrowings.」
Liabilities at the end of the second quarter were ¥4,285.522 million, an increase of ¥620.135 million from the end of the previous consolidated fiscal year due to increases in short-term and long-term borrowings. The company disclosed increased borrowing exposure related to acquisition financing and other factors. - FY2024-Q1WorsenedAnnual report
「JAPANDX, our consolidated subsidiary, drew the following borrowings to acquire shares of PlayNext Lab Co., Ltd., as described above under “1. Major Acquisition of a Company or Other Entity Through Share Acquisition.” Borrowing amount: ¥400 million Borrowing term: 7 years Collateral: Guarantees of obligations by the company, Eltes Co.,Ltd., and PlayNext Lab Co., Ltd.」
The company drew ¥400 million of 7-year borrowings to acquire PlayNext Lab and provided guarantees of obligations from the company and the acquired company. Financial exposure involving acquisition financing and guarantees is increasing. - FY2023Renewal of borrowings subject to financial covenantsAnnual report
「Of the long-term borrowings, including the portion due within one year, as of 28 February 2023, ¥450 million is subject to financial covenants requiring the company, consolidated subsidiary AIK and consolidated subsidiary And Security each to maintain cash flow at a specified level in their respective separate income statements.」
Borrowings subject to financial covenants related to AIK and And Security were disclosed at ¥450 million. Separately, covenants also apply to borrowings of ¥525.638 million and ¥1.1143 billion based on the company's consolidated cash flow. - FY2023-Q2WorsenedAnnual report
「JAPANDX, our consolidated subsidiary, drew the following borrowings to acquire shares of Metaown Co., Ltd., as described above under “Business Combination Through Share Acquisition.”」
The company drew new borrowings of ¥1.2 billion with a 7-year term to acquire Metaown and imposed financial covenants requiring cash flow to be maintained from the fiscal year ending February 2024 onward. Exposure to acquisition financing and financial covenants is increasing. - FY2023-Q1WorsenedAnnual report
「Borrowings outstanding — million yen ¥604 million The agreement also contains the following financial covenants: For each fiscal year ending on or after February 2024, the cash flow amount in the consolidated income statement of the parent company, Eltes Co.,Ltd., must be maintained at or above the scheduled repayments for that fiscal year on long-term borrowings used to purchase shares or fund capital expenditures. For the fiscal year ending February 2023, the amount must be maintained at 90% or more of those scheduled repayments.」
The company drew new borrowings of ¥604 million to fund the acquisition of ISA and SSS and additionally disclosed financial covenants requiring cash flow to be maintained at 90% or more of scheduled repayments in the fiscal year ending February 2023 and at or above scheduled repayments from the fiscal year ending February 2024 onward. - FY2022MitigatedAnnual report
「Of the long-term borrowings, including the portion due within one year, as of 28 February 2022, ¥525 million is subject to financial covenants requiring the company, consolidated subsidiary AIK and consolidated subsidiary And Security each to maintain cash flow at a specified level in their respective separate income statements. If the covenants are breached, the borrowing rate will increase by 0.40% at the lender's request.」
Long-term borrowings subject to the financial covenants decreased from ¥600 million in the previous year to ¥525 million. The provision for a 0.40% interest-rate increase upon breach remains in place. - FY2021RestatedAnnual report
「Of the long-term borrowings, including the portion due within one year, ¥600 million is subject to financial covenants requiring the company, consolidated subsidiary Eltes Security Intelligence Co.,Ltd. and consolidated subsidiary Asahi Anzen Gyomu-sha each to maintain cash flow at a specified level in their respective separate income statements. If the covenants are breached, the borrowing rate will increase by 0.40% at the lender's request.」
The company continues to disclose the financial covenants and the 0.40% interest-rate increase upon breach on the ¥600 million borrowing undertaken to acquire Asahi Anzen Gyomu-sha. - FY2021-Q3First statedAnnual report
「If the following financial figure cannot be maintained during the loan period beginning in the fiscal year ending February 2022, the interest rate will be increased by 0.4% per annum: the combined cash flow shown in the separate income statements of the company, ESI and Asahi Anzen Gyomu-sha at each company's fiscal year-end must be at least ¥75 million.」
The company disclosed a financial covenant on the ¥600 million, 8-year borrowing undertaken to acquire Asahi Anzen Gyomu-sha, under which the interest rate will increase by 0.4% per annum if combined cash flow of at least ¥75 million cannot be maintained from the fiscal year ending February 2022.