1

December 24, 2008
To whom it may concern,
Notice of Discontinuance of Class A Preferred Stock Issue and
Offering Common Stocks and Class B Preferred Stocks
through Third-Party Allotment

We, Radia Holdings, Inc. (hereinafter referred to as “the Company”), have resolved at the Board of
Directors Meeting held today to terminate the Subscription Agreement (hereinafter referred to as “the Former Subscription Agreement”) concluded on March 11, 2008 with Promontoria Investments I B.V. (hereinafter referred to as “Promontoria I”), our major shareholder with 16.54% of allotted capital as well as one of the major creditors, and to discontinue issuing the Company’s Class A Preferred Stock allotted to Promontoria I whose issuance was resolved at the Board of Directors Meeting held on March 11, 2008 and approved at the Extraordinary Meeting of Shareholders held on May 23 and June 7, 2008. Also, at the Board of Directors Meeting held today, we have resolved to conclude a new Subscription Agreement (hereinafter referred to as “the New Subscription Agreement”) concerning subscripting new stocks and so on with Promontoria I and, under the New Subscription Agreement, to offer new shares by having the lending claim from Promontoria I as their paid-in assets through a Third-party Share Allotment [1] to offer 3,120,000 common stocks of our company (issue price of 600 yen) for subscription making February 6, 2009 as the payment day (scheduled) and [2] to offer 136 Class B Preferred Stocks of our company (issue price of Yen 100,000,000) making June 2009 as the payment day (scheduled) (the total amount issued will be Yen 15,472,000,000. These are hereinafter called “this Capital Increase”) as explained in the details below.
In this Capital Increase based on the New Subscription Agreement, it is expected that a part of the
lending claim by Promontoria I to the Company to be allotted to the paid-in assets (it is “investment in kind” to the Company of the lending claim, hereinafter called “debt-equity swap (DES)”) and it aims at the stabilization of the financial ground by cutting down our interest-bearing debt for the same amount as the total issue amount of the common stock and the Class B Preferred Stocks and the elimination of the liabilities in asset deficiency by increasing in capital. The total amount of this Capital Increase will be the same as the amount of the issue of the Class A Preferred Stock (Yen 15,500,000,000) that was scheduled to be paid on December 25, 2008.

Company:
RADIA HOLDINGS, INC.
Representative: Shinichi Horii
Representative Director and President

(Code No. 4723 TSE 2
nd
Section)
Contact: Hideshi
Tachiyama
Senior Executive Officer
General Manager,
Public Relations and Investor Relations
Division
(TEL:
03-3405-9262)

2
Our group companies declared, for two continuous financial terms, the net deficit of Yen 40.7 Billion
for the term ending June 2007 and Yen 27.4 Billion for the term ending June 2008, due to the withdrawal of COMSN Inc, and the closure of the business of The Goodwill Inc. As a result, our equity capital (the total of the stockholders’ equity and the difference of the assessed value and conversion) of our group for the term ending June 2008 was with excess liabilities of Yen 5.4 Billion.
In addition, we had a net loss of Yen 6.5 Billion in the first quarter of the term ending June 2009 (from
July to September 2008), thus our equity capital at the end of first quarter was with excess liabilities of Yen 10.8 Billion.
It is well-known that there are great changes of the environment such as the world-wide financial
crisis stemmed from the sub-prime issue and its big influence to the actual economy and thus the business environment, the employment situation and the financial market situation surrounding the Company are changing greatly exceeding the expectation.
Under this situation, the acquisition price of the Class A Preferred Stock (conversion price to so-called
common stock) and the current share price of our company became significantly different and thus we had no other option but to alter the price and we agreed to dissolve the old underwriting agreement after a numerous discussions with Promontoria I and we decided to take a new capital policy that takes place of the Former Subscription Agreement.
The restructuring of the new capital and the debt (financial restructuring) based on this new
underwriting agreement is approximately 15.5 Billion yen which is almost the same amount as the amount scheduled for issuing the Class A Preferred Stock and has the similar effect of capital injection. The allocation will be to the consortium that is made up with the affiliated companies to Cerberus Group which is a major investment fund in the United States and Morgan Stanley which is a major finance institution in the United States, namely Promontoria I, Promontoria Investments II B.V.（hereafter referred to as “Promontoria II” ） and Promontoria Investments III B.V. （ hereafter referred to as “Promontoria III”）.
We think, by this Capital Increase, the ownership percentage that Promontoria I, Promontoria II and
Promontoria III possess will become 58.93% after issuing the common stock in February 2009 and it will contribute to the stabilization of the stockholders of our company and the stronger cooperative relationship with Promontoria I which is the biggest lender to our group should become clear.
The Common Stock Offering is subject to the effect of security registration statement under the
Financial Instrument and Exchange Law and to the satisfaction of conditions precedent under the New Agreement, and Class B Preferred Stock Offering is subject to the approval on both amendment of the articles of incorporation and the issuance of Class B Preferred Stock at the extraordinary meeting of shareholders (hereinafter referred to as “the Extraordinary Meeting of Shareholders”) scheduled to be held in June 2009, and to the satisfaction of conditions precedent associated with issuance of Class B Preferred Stock defined in the New Subscription Agreement.
Our liabilities exceeded assets at the term ending June 2008, and when it is not dissolved in the term
ending June 2009, our company will become delisted. We recognize that it is a pressing issue to attempt strengthening the financial position by eliminating the liabilities in excess of assets and cutting down the interest-bearing debt as soon as possible for the Company to continue and to secure the stability of the management.
Though there is a dilution anxiety of the stocks by this capital increase, we made a judgment that this

3
third-party allocation of shares is necessary and the best measure to reinforce our financial strength.
Details
1.
Purpose of Offering of Stocks by Third-Party Allotment
As announced in our disclosure dated October 14, 2008 titled “Notice on the Formulation of
Business Reorganization Plan (Medium-term Management Plan) and Business Restructuring,” the Company is in the process of changing its business model as well as building up a stable management base for mid to long term by profit growth and optimal resource allocation. Among others, the company recognizes the elimination of the current equity deficit and financial restructurinto materialize robust financial status are the most essential features.
In a meantime, as it was disclosed in the ‘Additional Information’ in the quarterly financial report
dated November 14, 2008, Class A Preferred Stocks scheduled to issue on December 25, 2008 violates the presumptions of the stock underwriting due to asset deficiency, etc and there is a significant difference between the conversion price to common stock and our stock price. Thereforit has been the most urgent issue to agree with Promontoria I on a new subscription agreement by the relevant payment date. Like Class A Preferred Stock that the agreement was terminated, this transaction for capital increase by common stocks and Class B Preferred Stock on the New Agreement will be conducted by doing dept-for-equity swaps (DES) and aims for stabilizing financial status through squeezing the debt of the Company and eliminating asset deficiency through strengthening of equity capital.

2.
Funds to be raised and the purpose
(1) Amount of funds to be raised (Net Proceeds)
This Capital Increase has a purpose of strengthening financial status by upgrading equity capital. It utilizes a method of dept-for-equity swaps (DES) to improve balance sheet, there will be no fund raising, but the Company’s interest-bearing debt will be reduced the amount of Class B Preferred Stocks of about Yen 15.5 Billion.

(2) Use
of
Proceeds
As stated above, there is no fund raising.

(3) Scheduled Period of Expenditure of Proceeds
As stated above, there is no fund raising.

(4) Rationales for the fund purpose
By adding capital augmenting money amounting about Yen 15.5 Billion of this Capital Increase to the consolidated equity capital as of September 30, 2008, the amount of equity capital will increase from approximately – (minus) Yen 10.8 Billion to about Yen 4.7 Billion, and equity deficit will be resolved which is essential for maintaining TSE listing. The Capital Increase is an utmost indispensable for the Company to advance to the next growth stage by normalizing financial status, as well as to pursue balance sheet improvement by reducing borrowing and strengthening

4
of equity capital.

3．Business Performance and Equity Finance in Last Three Years (1) Year Performance in Last Three (consolidated) (in million yen)
Accounting Period
Period of June 2006 Period of June 2007 Period of June 2008
Sales 185,948
509,001
584,322
Operating Profit
7,895
9,945
△
6,683
Recurring Profit
6,704
6,794
△
12,702
Current Term Net Income
3,429
△
40,708
△
27,416
Current Term Net Income per Share (Yen)
1,743.22
△
19,510.20
△
10,758.66
Dividend per Share (Yen)
1,625
0
0
Net Assets per Share(Yen)
23,783.09
4,569.51
△
1,830.17

(2) Current Number of Outstanding Shares and Latent Shares (as of November 14, 2008)
Type of Share
Number of Share
As % of Outstanding Shares
Total No. of Outstanding Shares
3,022,118 shares
100%
No. of Latent Shares at the Current Conversion Price (exercise price)
0 share
0%
No. of Latent Shares at Floor Conversion Price (exercise price)
0 share
0%
No. of Latent Shares at Cap Conversion Price (exercise price)
0 share
0%
(3) Recent Stock Performance
1. Last Three Years

Period of June 2006
Period of June 2007
Period of June 2008
Open
67,333 yen
84,600 yen
41,200 yen
High
115,000 yen
128,000 yen
45,650 yen
Low
55,667 yen
42,000 yen
4,450 yen
Closing
84,500 yen
42,400 yen
5,110 yen

2. Last six months
June
July
August
September
October
November
Open
10,950 yen
5,100 yen
4,280 yen
3,590 yen
3,370 yen
1,150 yen
High
12,020 yen
7,470 yen
5,320 yen
4,980 yen
3,420 yen
1,179 yen
Low
4,450 yen
4,110 yen
3,520 yen
2,680 yen
989 yen
570 yen
Closing
5,110 yen
4,310 yen
3,650 yen
3,340 yen
1,159 yen
580 yen

5

3. Share Price One Day Prior to Date of Issuance Resolution

As of Dec 22, 2008
Open 590
yen
High 592
yen
Low 560
yen
Closing 562
yen
(4) Current Equity Finance
- Third Party Allotment of New Shares (Common Stock, Debt-Equity Swap (DES))
Issue Date
February 6, 2009
Amount Paid
1,872,000,000 yen (Issue Price: 600 yen) (Note 1)
No. of Outstanding Shares at Offering
3,022,118 shares
No. of Shares to be Offered by the Said New Shares
3,120,000 shares
Total No. of Outstanding Shares after Offering
6,142,118 shares
Allotted to
Promontoria Investments I B. V.
1,040,000 shares
Promontoria Investments II B. V.
1,040,000 shares
Promontoria Investments III B. V.
1,040,000 shares

- Third-Party Allotment of New Shares (Class B preferred stocks, Debt-Equity Swap (DES))
Issue date
June 2009 (planned)
Amount of Proceeds
13,600,000,000 yen (Issue Price: 100,000,000 yen) (Note 1)
No. of Outstanding Shares at Offering
-
No. of Shares to be Offered by the said New Shares
Class B Preferred Stocks 136 shares
Total No. of
Class B Preferred Stocks 136 shares