ENEOS Holdings (JHJ) Risk Analysis

Customers, suppliers and business partners of JXTG Holdings or TonenGeneral may, in response to the share exchange or to subsequent steps taken to integrate the businesses of JXTG Holdings and TonenGeneral, delay or defer decisions concerning their relationships with JXTG Holdings. Moreover, the terms of some of the business alliances to which JXTG Holdings has succeeded permit the business partner to terminate the alliance upon the completion of the share exchange. The loss of such customers, suppliers and business partners, or the termination of business alliances may have a material adverse effect on JXTG Holdings' business and results of operations.

JXTG Holdings relies on third-party suppliers for the concentrate to be used in its smelting and refining business, acquiring copper concentrate for its smelting operations from overseas suppliers to produce refined copper for sale to its customers. If the world supply of copper concentrate becomes strained, due to declines in worldwide reserves of ore with high copper content, increasing demand for copper concentrate from large consumers in China and India, the emergence of an oligopoly of mining majors or other factors, it may lead to intense competition for the copper concentrate available in the world market. JXTG Holdings has invested in and financed various mining complexes to source a significant portion of the copper concentrate used in its smelting and refining business. If operations in any of the mining complexes in which JXTG Holdings has invested or financed are significantly reduced, interrupted or curtailed, JXTG Holdings may be unable to timely procure on similar terms the raw materials it needs for its smelting and refining business, and its financial condition and results of operations may be adversely affected. In addition, the margin JXTG Holdings earns in its smelting and refining business principally consists of smelting and refining charges and a sales premium above the London Metal Exchange price of refined copper. Various factors beyond JXTG Holdings' control may, however, affect the smelting and refining charges or sales premiums JXTG Holdings is able to collect. Smelting and refining charges are established through negotiations with copper concentrate suppliers. If the world supply of copper concentrate becomes insufficient for reasons stated above, JXTG Holdings' negotiating position may become weaker. These factors may combine to put downward pressure on smelting margins and may lead to an adverse effect on JXTG Holdings' results of operations. Moreover, JXTG Holdings' smelting and refining contracts are denominated in dollars and therefore, JXTG Holdings' smelting and refining margins tend to decline when the yen appreciates in value. Sales premiums are established through negotiations with its customers and reflect various factors, including demand for refined copper, import tariffs and other importation costs, as well as product quality. Depending on the outcome of customer negotiations, JXTG Holdings' margins could decrease, potentially leading to a material adverse effect on JXTG Holdings' financial condition and results of operations.

Pursuant to the Companies Act of Japan and certain related legislation, the Articles of Incorporation of JXTG Holdings provide that 100 shares of JXTG Holdings common stock constitute one unit. Holders of shares that constitute less than one unit do not have voting rights under the Companies Act of Japan, which imposes other significant restrictions and limitations on such holders. The transferability of such shares is also significantly limited. Under the unit share system, holders of shares constituting less than one unit have the right to require the issuer to purchase their shares. In addition, JXTG Holdings' Articles of Incorporation will provide that a holder of less than a unit of JXTG Holdings shares may request that JXTG Holdings sell to such holder such amount of shares which will, when added together with the shares constituting less than one unit, constitute one unit of shares, as long as JXTG Holdings has treasury stock to sell upon such request.

The Articles of Incorporation, Share Handling Regulations and Regulations of the Board of Directors, as well as the Companies Act of Japan, govern the affairs of JXTG Holdings. Legal principles relating to such matters as the validity of corporate actions, directors' and officers' fiduciary duties and shareholders' rights may be different from those that would apply if JXTG Holdings were a non-Japanese company. Shareholders' rights under Japanese law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions within the United States. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in another jurisdiction.

Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each listed stock based on the previous day's closing price. Although transactions on a given Japanese stock exchange may continue at the upward or downward price limit, if the price limit is reached on a particular trading day, no transactions on such exchange may take place outside these limits. Consequently, an investor wishing to sell shares on a Japanese stock exchange at a price outside of the relevant daily limit may be unable to complete the sale through that exchange on that particular trading day.

JXTG Holdings is a joint stock company incorporated under the Companies Act of Japan. All of JXTG Holdings' directors, senior management and corporate auditors reside outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon these persons. Furthermore, many of the assets of JXTG Holdings and these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to enforce, against JXTG Holdings or these persons, judgments obtained in the U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. JXTG Holdings believes that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of U.S. courts, of claims predicated solely upon the federal securities laws of the United States.