KOBE, Japan-(Business Wire)-September 20, 2008 - Ten-Arrows Co., Ltd. (OSAKA:9885):

Announcement of an Affirmative View Regarding a Tender Offer in the Company Shares

Ten-Arrows Co., Ltd. (the “Company”) is pleased to announce that the Company, at a meeting of its Board of Directors held on September 19, 2008, resolved that it expresses an affirmative view regarding a tender offer (the “Tender Offer”) for shares of common stock of Ten-Arrows by Southern Eagle Inc. (“Southern Eagle”) and Otto Inc. (“Otto”) (each individually a “Tender Offeror” and collectively the “Tender Offerors”), in the following manner.

This resolution expressing an affirmative view is based on the assumption that the Tender Offerors will make the Company a wholly-owned subsidiary thereof and the Company shares will be delisted subsequently if the Tender Offer comes into effect.

2. Substance of and Grounds and Reasons for the Affirmative View Regarding the Tender Offer

(1) Substance of the affirmative view regarding the Tender Offer

The Company, at the meeting of its Board of Directors held on September 19, 2008, resolved that it expresses an affirmative view with respect to the implementation of the Tender Offer, based on the grounds and reasons as described in (2) below.

Katsuya Hayashi, Director and Representative Executive Officer of the Company, intends to indirectly make an investment into Tomorrow, the parent company of the Tender Offerors, after completion of the Tender Offer. As a special interested party, he therefore refrained from participating in discussions and the subsequent voting on the resolution at the Board of Directors’ meeting relating to the above. Hiroko Hayashi also refrained from participating in discussions and the subsequent voting on the resolution in order to avoid potential conflicts of interest in view of her status as a member of the Founding Family. All of the directors (excluding Katsuya Hayashi and Hiroko Hayashi), all of whom are outside directors, attended the meeting of the Company’s Board of Directors in which the affirmative resolution to agree to the Tender Offer was unanimously adopted.

(2) Grounds and Reasons for the Affirmative View Regarding the Tender Offer

(I) Outline of the Tender Offer

According to the press release issued by the Tender Offerors regarding the Tender Offer, both Tender Offerors are as of today special companies with limited liability, all of whose issued and outstanding shares are held, directly or indirectly, by Tomorrow Co., Ltd. (“Tomorrow”). Tomorrow is controlled by an investment fund to whom Morgan Stanley’s private equity advisors in Asia (“Morgan Stanley Private Equity Asia” or “MSPEA”, investment funds and companies to whom MSPEA provides financial advisory services collectively the “MSPEA Group”), which is the private equity division for Asia of the Morgan Stanley Group (“Morgan Stanley Group”) headed by the New York Stock Exchange-listed Morgan Stanley, provide financial advisory services and which was established for the purpose of conducting the Tender Offer. Due to the transfer from the founding family (the “Founding Family”, as defined below) of the issued and outstanding shares of the Tender Offerors and those of Clematis Inc. (“Clematis”), a shareholder of the Tender Offerors, prior to the Tender Offer to Tomorrow, Tomorrow now holds all the issued and outstanding shares of the Tender Offerors, either directly or indirectly. As of today, Southern Eagle holds 3,802,432 shares (ratio of voting rights to the total voting rights of the Company: 19.63%) and Otto holds 1,581,050 shares (ratio of voting rights to the total voting rights of the Company: 8.16%) of the Company. Clematis does not directly hold any Company shares.

The Tender Offerors intend to conduct the Tender Offer through a so-called management buyout (MBO)¹ technique (the “Transactions”) and thus acquire, excluding the shares of the Company held by them (5,383,482 shares in total; voting rights ratio to the total voting rights of the Company: 27.80%), all the issued and outstanding shares of the Company (exclusive of the treasury stock), as part of a series of transactions to discontinue public trading of the Company’s shares.

Katsuya Hayashi, Director and Representative Executive Officer of the Company; Hiroko Hayashi, a founder and Director of the Company; Masaharu Hayashi, a founder of the Company; and Tatsuya Hayashi and Itsuha Sezaki, members of the Hayashi Family (these five persons collectively the “Founding Family”) hold the Company shares as indicated below. The Tender Offerors have obtained an agreement from the Founding Family that they will tender all shares of the Company held by the Founding Family in the Tender Offer.

Prior to the Tender Offer, Tomorrow, which holds substantially all the issued and outstanding shares of the Tender Offerors; MSPE Tanya Holdings BVBA (“MSPETH”), a corporation which is Tomorrow’s shareholder and was established under Belgian law and is controlled by an investment fund to which MSPEA provides financial advisory services; a fund called K&H L.P. (whose general partner is Bianco Capital Ltd.) to which Hayate Investments Co., Ltd. (“Hayate”) gives advice for investment activities (the “Hayate Vehicle”) and the Founding Family entered into a management buyout master agreement (the “MBO master agreement”) regarding various conditions related to the execution of the Transactions.

Upon the fulfillment of certain procedures stipulated in the MBO master agreement, several members of the Founding Family, including Katsuya Hayashi, Director and Representative Executive Officer of the Company, will make investments as limited partners in the Hayate Vehicle, and the Hayate Vehicle shall use ¥3.1 billion of the investments by the Founding Family in its investment into Tomorrow, by accepting a capital increase through third-party allocation, that Tomorrow intends to conduct after the settlement of the Tender Offer. After the capital increase through third-party allocation is executed, MSPETH and the Hayate Vehicle will respectively hold 50.8% and 49.2% of the issued and outstanding shares of Tomorrow.

Furthermore, it is assumed that, if the settlement of the Tender Offer is completed, the Tender Offerors will conduct the procedure that allows the Tender Offerors to acquire all the issued and outstanding shares of the Company exclusive of the treasury stock (the “Procedure for Making a Wholly-Owned Subsidiary”), which is described in (4) below. Then, after the Procedure for Making a Wholly-Owned Subsidiary is completed, it is also assumed that Tomorrow, the Tender Offerors and Clematis will conduct a management integration through merger or another organizational restructuring method in the future.

The MSPEA Group and Hayate will support the mid-to-long-term business reforms to be made by the Company not only on a Japanese but also an international level by establishing close cooperative working relationships with the Company’s management after the execution of the Transactions. Meanwhile, Katsuya Hayashi, a member of the Founding Family who will participate in management of the Company after the execution of the Transactions, views the Transactions as a corporate innovation for the purpose of creating favorable tension across the management that will strengthen corporate capabilities. The Company understands from Katsuya Hayashi that he intends to vigorously carry out the task of raising the corporate value of the Company through the process of business reforms by taking maximum advantage of the resources made available through the support from the MSPEA Group and Hayate.

(II) Grounds for our decision to express an affirmative view with respect to the Tender Offer

Since the Company’s establishment in 1975, Ten Arrows and its group companies (the “Ten-Arrows Group”) have contributed to female beauty and health, as well as to women’s social advancement, by supplying quality goods centering on ladies’ functional innerwear and door-to-door sales services, under the founding spirit of “All the people should have rich lives and all the people who have relations with the Company should be enriched with us.” In the course of its corporate growth, the Company registered its stock for over-the-counter transactions at the Japan Securities Dealers Association in October 1990 and also listed on the Second Section of the Osaka Securities Exchange in November 1998. Furthermore, the Company conducted an incorporation-type company split (shinsetsu-bunkatsu) by which Charle Co., Ltd. was established in June 2006, and later adopted a holding company system to expand its business. (At the time of the shift to a holding company system, the trade name of the holding company was changed from Charle Co., Ltd. to Ten-Arrows Co., Ltd., and the trade name of the newly established company for the ladies’ innerwear business became Charle Co., Ltd. In October 2008, the Company will succeed the ladies’ innerwear wholesale business currently engaged in by Charle through an absorption-type company split (kyushu-bunkatsu) of Charle, and become an operating holding company with the trade name Charle Co., Ltd., again.).

However, net sales of Charle, the core operating company in the Ten-Arrows Group, has shown a declining trend for the past 11 years, mainly due to the recent tendency to avoid door-to-door sales among consumers, intensifying competition in the functional innerwear sales market, and an aging distributor base. Although the shift to the holding company system was directed toward expanding the scope of businesses of the Ten-Arrows Group, the profitability of a group company engaged in the wholesale gifts business also deteriorated due to changes in the custom of gift-giving and intensifying competition with other business industries. In November 2007, this group company sought to revitalize its business through integration with a peer company in the same industry and the generation of synergies. Ultimately, however, business operations of this group company were sold, and business development within the Ten-Arrows Group has stalled.

To break through such a deadlock, since the current management assumed leadership, the Company has implemented radical business reforms to revitalize the core ladies’ innerwear wholesale business and restructure the corporate group to focus management resources on the businesses which focus around the concept of “contributing to female beauty and health” (collectively the “Business Reform”).

In the course of promoting such reforms and restructuring, because the Company will incur operating expenses in advance in order to implement initiatives such as new purchasing channels and improvements to the business environment of distributors of ladies’ innerwear across Japan, there is a business risk of a decrease in profits in the mid-term as well as not achieving financial results as planned. Moreover, because investment costs for new business development will also be necessary for the locally-affiliated company in China operating a ladies’ innerwear business, it will require a period of time to restore profitability. In addition, to develop new businesses other than the ladies’ innerwear business, marketing costs will also be incurred, and it is anticipated that the Company will suffer deficits in the initial stages. Despite these adverse financial factors that may affect short-term operating performance even to a loss, management judged that it must recognize the necessity of consistent and resolute reforms and that the Company is in a situation where negative effects in the mid-to-long-term may be a possibility depending on the success or failure of the Business Reform. Further, in order to overcome such a harsh operating environment and conduct resolute reforms based on a consistent management philosophy, not only is it necessary for shareholders, management executives and employees to concentrate their efforts on renewal of the Company, but management executives must also focus on risk management and take full responsibility for establishing an effective management system that allows for more agile and swift decision making. These measures are considered indispensable to maximize the corporate value of the Company from the mid-to-long-term perspective.

On the other hand, it is necessary to conduct resolute reforms based on a consistent management philosophy without being influenced by short-term operating performance in order to successfully carry out the Business Reform. In other words, the Company’s businesses are at a transitional stage of structural change in the process of the Business Reform. Consequently, it is expected that there will be a temporary scale-down of net sales and/or deterioration of earnings and/or cash flows due to the required increase in investment and growing uncertainty over future performance, along with a possible decline in the stock price caused by these negative effects. Although the Business Reform might not be favorably evaluated in the capital markets, which have recently tended to conduct business evaluations according to a short-term perspective, the Business Reform must be implemented consistently on an ongoing basis in order to raise the mid-to-long-term corporate value of the Company.

The Business Reform might be exposed to certain risks. Although the Business Reform has considered the introduction of various schemes to revitalize our distributors (the “Business Members”), for example, there is a danger that the implementation of such measures may temporarily confuse the business fields and thus cause stagnation of activities of the Business Members, leading to a decline in net sales of the Company. Furthermore, we intend to invest a relatively large sum in information systems, etc. to implement a more convenient product purchasing channel; however, earnings and cash flows of the Company might be negatively affected by the relevant expenses if anticipated results cannot be successfully achieved.

Given these circumstances, Katsuya Hayashi, Director and Representative Executive Officer of the Company, continued to discuss and deliberate the best possible management measures to be taken with the MSPEA Group and Hayate to raise the mid-to-long-term corporate value of the Company.

As a result, Katsuya Hayashi confirmed anew that the implementation of the Business Reform is necessary for raising the mid-to-long-term corporate value of the Company. He subsequently concluded that (i) the Business Reform must be executed regardless of short-term operating performance and/or stock price fluctuations; (ii) an agile and swift business-executing system should be established through concerted efforts among shareholders, management executives and employees under clear corporate governance that will be realized against a backdrop of core stable shareholders who will support the Company during the mid-to-long-term after the discontinuance of public trading of the Company’s shares via a MBO to prevent ordinary shareholders from being exposed to the risks involved in the Business Reform; and (iii) it would be best to demonstrate a clear resolve regarding the Business Reform to all the stakeholders, including management executives and employees, in order to promote its acceptance. Furthermore, during the consultations and deliberations with Katsuya Hayashi, the MSPEA Group and Hayate indicated their interest in the potential for improvement in the management of and improved corporate value of the Company through the Business Reform, and each agreed to work on improving the mid-to-long-term corporate value of the Company. Specifically, by drawing on their broad networks in Japan and overseas, the MSPEA Group and Hayate will endeavor to recruit personnel at both the executive and operational levels that would reinforce the Company’s businesses, support business alliance projects, introduce industrial best practices, and support the growth strategy of the Company’s China business. In addition, the Company understands from the MSPEA Group and Hayate that they will actively support the Company with implementing management controls and standards and the preparation and execution of business strategies based on such standards by fully utilizing their management and financial expertise.

Having received the proposal on the Tender Offer from the Tender Offerors, the Company comprehensively considered the circumstances surrounding the Company as described above, and studied the issue. As a result, the Company reached the conclusion that making the Company a wholly-owned subsidiary of the Tender Offerors through the execution of the Transactions would effectively ensure swifter decision making by management and would be the most effective way to raise the corporate value of the Company.

In addition, as described in (3) below, the Company judged that the offer price in the Tender Offer is fair and reasonable for shareholders of the Company and that the Tender Offer provides the shareholders with an opportunity to sell their shares at a fair and reasonable price. Consequently, the Board of Directors determined to agree with the Tender Offer.

The Company, at the meeting of the Board of Directors held on September 19, 2008, resolved that it will not submit a proposal to a general meeting of shareholders regarding the dividends from surplus to be distributed to shareholders whose names are registered or recorded in the list of shareholders and beneficiary shareholders as of March 31, 2009, if the Tender Offer comes into effect. In addition, the Company, at the same meeting of the Board of Directors, also resolved that shareholder benefits programs shall be abolished if the Tender Offer comes into effect. For details, refer to the “Announcement of Revisions to Year-End Dividend Projection for the Year Ending March 2009 and Abolition of Shareholder Benefits Programs” released today.

Note 1: MBO generally means a transaction in which all or several management executives of a company make investments therein by purchasing the shares thereof on the premise of continued business activities of the company.

(3) Measures to ensure the fairness of the Tender Offer, such as measures taken to ensure fairness in the evaluation of the offer price and measures taken to prevent conflicts of interest

The Tender Offerors have taken the following measures to ensure the fairness of and prevent conflicts of interest in the Transactions, which include the Tender Offer, based on the fact that the Tender Offer will be conducted as part of the MBO to be conducted centered on Katsuya Hayashi, Director and Representative Executive Officer of the Company.

(I) Disclosure of sufficient information to shareholders

The Tender Offerors have specifically disclosed information regarding the background of and reasons for the Tender Offer, as well as the details about the calculation of the offer price (“Offer Price”) in the Tender Offer, in a tender offer notification regarding the Tender Offer, so that shareholders of the Company can make appropriate judgments as to whether or not to accept the Tender Offer.

(II) Valuation statement obtained from an independent third-party assessor

The Tender Offerors referred to the valuation statement regarding the stock value of the Company shares (the “Valuation Statement”) submitted by Ernst & Young Transaction Advisory Services Co., Ltd. (“EYTAS”) and made the final decision on the Offer Price (of ¥800 per share) based on the results of discussions and negotiations with the Company.

In evaluating the Company’s stock value, EYTAS decided that it would be appropriate to evaluate the stock value in a multi-faceted manner on the assumption of continued business activities of the Company by verifying the business plan, etc. of the Company submitted by the Tender Offerors. EYTAS therefore calculated the valuations of the Company’s stock value according to the method used, such as the market share price method, the comparable peer company method (EBITDA multiple method) and the Discounted Cash Flow method (the “DCF method”).

I. Market share price method

EYTAS adopted the market share price method, which is considered to provide the most objective results in evaluating the stock value of publicly traded companies, to evaluate the stock value of the Company on the basis of the Company’s current stock price in the market.

Using September 16, 2008 as the reference date for evaluation, EYTAS calculated the range of the Company’s stock value to be between ¥498 and ¥600 per share, based on the closing prices of the Company’s stock for the three month period up to September 16, 2008, with the record-low closing price within that period as the minimum limit and the record-high closing price as the maximum limit.

II. Comparable peer company method

EYTAS adopted the comparable peer company method because it is considered to allow for empirical evaluation of stock value through the use of stock prices and financial data of comparable peer companies.

EYTAS calculated the range of the Company’s stock value to be between ¥599 and ¥855 per share based on the EBITDA (earnings before interest, taxes, depreciation and amortization) multiple method, which was calculated for the listed companies that engage in businesses similar to that of the Company.

III. DCF method

EYTAS adopted the DCF method, which is considered to be an appropriate method for evaluating corporate value as a going concern of the targeted corporation based on its predicted future cash flows (profitability capability).

EYTAS calculated the range of the Company’s stock value to be between ¥646 and ¥908 per share by discounting the predicted future cash flows to be created by the Company, which were calculated based on financial projections submitted by the Company in view of the feasibility from the viewpoint of a purchaser, using a discount rate employing the capital cost assumed using a generally-used capital asset pricing model, to the present value.

The Tender Offerors carefully examined the Offer Price of the Tender Offer while referring to the calculation results that ranged between ¥498 and ¥908 per share as above and the past trading prices of the Company’s shares. The Tender Offerors made the final decision on the Offer Price by taking into consideration the possibility of delisting of the Company’s stock after the implementation of the Transactions including the Tender Offer, which would have a significant impact on the Company’s shareholders, considerations of whether or not the Company would accept the Tender Offer, the prospects for the Tender Offer, the results of discussions and negotiations with the Board of Directors of the Company, etc.

The Offer Price (of ¥800 per share) represents a premium of 54.8%, 50.7%, 49.6% and 41.7% over the simple arithmetic average of ¥517, ¥531, ¥535 and ¥565, the respective closing stock prices of the Company at the Osaka Securities Exchange during the past 1-month period, 3-month period, 6-month period and 12-month period ending September 18, 2008.

For its part, the Board of Directors of the Company selected and requested KPMG FAS Co., Ltd. (“KPMG FAS”), which is a third-party assessor independent from the Tender Offerors and the Company, to evaluate the stock value of its shares to avoid an unfair and arbitrary judgment in the process of decision-making on the judgment of the fairness and appropriateness of the Offer Price proposed by the Tender Offerors.

In evaluating the Company’s stock value, KPMG FAS received materials and explanations on current and future business plans, etc.², from the Company and collected and reviewed information necessary for the valuation and calculated the Company’s stock value based on such information. KPMG FAS calculated and reported the following results of its valuations to the Board of Directors.

I. Market price method

As the shares of the Company are listed on the second section of the Osaka Securities Exchange, KPMG FAS adopted the market price method for the Company’s stock value, as it is a highly-objective indicator for companies listed on a market.

Using September 17, 2008 as the reference date for evaluation, KPMG FAS calculated the range of the Company’s stock value to be between ¥518 and ¥535 per share based on the average stock prices of the Company for the past one month and six month periods up to September 17, 2008, with the average stock price for the past one month period as the minimum limit and the average stock price for the past six month period as the maximum limit, after calculating the average stock price for the past one month, three-months and six-month periods, respectively.

II. DCF method

KPMG FAS adopted valuation using this method as it is the most rational method for the calculation of theoretical value, because excess return and business risks can be reflected in the evaluation of the targeted corporation based on its predicted future cash flows.

KPMG FAS calculated the range of the Company’s stock value to be between ¥681 and ¥1,010 per share by discounting the predicted future cash flows to be created by the Company, which were calculated based on the business plan submitted by the Company, by a certain discount rate to the present value.

III. Market multiple method

KPMG FAS adopted the market multiple method, which identifies comparable listed companies with similar business descriptions, financial situations and earnings conditions as those of the Company and valuation target companies, as a highly-objective value indicator similar to the market price method, and in which stock market valuation is well reflected.

KPMG FAS calculated that the range of the Company’s stock value to be between ¥976 and ¥1,259 per share through data comparison of the EBITDA multiple method and ordinary margin of the comparable listed companies.

IV. Adjusted net asset method

Highly convertible assets, such as cash and deposits, and securities and investment securities, for which objective market prices can be calculated, account for relatively high levels on the Company’s balance sheet. As such, KPMG FAS conducted its valuation of the Company’s stock value using this method as it was considered that market-price-based static valuation of assets and liabilities would allow it to obtain objective and stable valuation results.

KPMG FAS calculated the Company’s stock value to be ¥929 per share based on the adjusted net assets that were computed after adjusting for additions/deductions resulting from a market price valuation of assets and liabilities on the net asset amount on the consolidated balance sheet as of June 30, 2008.

Referring to the results of the KPMG FAS valuation report above and based on the results of discussions and negotiations with Tender Offerors, the Board of Directors carefully examined various conditions of the Tender Offer from the viewpoints of financial conditions, business climate and fairness between shareholders, as well as other factors. As a result, the Company, at the meeting of Board of Directors held on September 19, 2008, judged that the Offer Price and other various conditions in the Tender Offer are appropriate and that the Tender Offer provides the shareholders with an opportunity to sell their shares at a fair and reasonable price. Consequently, the Board of Directors determined to agree with the Tender Offer and all the directors present thereat unanimously adopted the affirmative resolution to agree with the Tender Offer.

Note 2: Although the Company prepared a business plan in July 2008 based on the Medium-Term Management Plan that was approved at the Board of Directors’ meeting held in April 2008, this business plan was not presented to the Board of Directors. The outside directors continued to examine the feasibility of this business plan in August and September 2008. Consequently, the Board of Directors passed a resolution approving the business plan with revised figures.

(III) Approval by all of the directors present

As a result of careful discussions on the Tender Offer from the standpoint of raising the corporate value of the Company, based on the information obtained by its information collection activity including the results of the valuation report described above, at the Board of Directors’ meeting held on September 19, 2008, the Board of Directors judged the various conditions of the Tender Offer to be appropriate and that the Tender Offer would present its shareholders with an opportunity to sell their shares at a fair and reasonable price. Consequently, all three directors present (i.e. all directors excluding Katsuya Hayashi and Hiroko Hayashi) unanimously adopted the resolution approving the Tender Offer.

In addition, since June 2008 the Company has received explanation about legal issues related to the Transactions from the Ohebashi Law Office.

Katsuya Hayashi, the Director and Representative Executive Officer of the Company, intends to make an investment through the Hayate Vehicle into Tomorrow, which holds all issued and outstanding shares of the Tender Offerors. As a special interested party, he therefore refrained from participating in discussions and the subsequent voting on the resolution concerning the Transactions at the Board of Directors’ meeting described above. Hiroko Hayashi, Director, also refrained from participating in discussions and the subsequent voting on the resolution in order to avoid potential conflicts of interest in view of her status as a member of the Founding Family. Excluding Katsuya Hayashi and Hiroko Hayashi, three directors attended the meeting of the Company’s Board of Directors in which the resolution concerning the Transactions was adopted, and unanimously adopted the resolution to agree to the Tender Offer.

(IV) Relatively longer tender offer period

The applicable laws and ordinances stipulate the shortest duration of a tender offer for purchases (the “Tender Offer Period”) to be 20 business days. The Tender Offerors have set the Tender Offer Period in the Tender Offer to be 30 business days. The relatively longer term established for the Tender Offer Period is intended to ensure that the Company’s shareholders have appropriate opportunities with respect to the decision to subscribe for the Tender Offer and als