LIG Defense & Aerospace (079550) (LIG D&A) will raise 500 billion won through a rights offering to expand its production capacity for the Cheongung-II, a medium-range surface-to-air guided missile.
According to the Financial Supervisory Service's electronic disclosure system Wednesday, LIG D&A decided to conduct a third-party allotment rights offering to secure facility funds. The offering will issue 876,153 unlisted preferred shares without voting rights at 570,676 won per share. The third-party allotment recipient is "K-Defense Growth No. 1," a special purpose company (SPC) to be established by D-Investment and IMM Investment.
The funds will be raised through the National Growth Fund, a public-private joint policy financing program created to foster advanced strategic industries and strengthen global competitiveness. On Tuesday, the National Growth Fund's fund management review committee approved a 500 billion won investment proposal to fund LIG D&A's expansion of its surface-to-air missile mass-production facilities and its research and development (R&D) investment in artificial intelligence (AI)-based unmanned and autonomous systems.
The raised funds will be invested through 2028 in the new construction of a system, inspection, and testing workshop (House 3) in Gumi, North Gyeongsang Province, and a guided missile system inspection and testing facility (House 2) in Gimcheon. The company will also pursue expansion of existing testing sites and machinery equipment in Gumi and Gimcheon.
Based on the expanded facilities, LIG D&A plans to increase production of the Cheongung-II, its best-seller. The Cheongung-II deployed in the UAE proved its combat performance by intercepting Iranian missile attacks at a 96% interception rate during the U.S.-Iran war. This sparked not only the possibility of additional exports to the UAE but also significantly increased new demand from Middle Eastern and European countries including Qatar, Kuwait, and Romania. This is the backdrop for LIG D&A's accelerated efforts to expand the capacity of its Gumi and Gimcheon houses, where the Cheongung-II is produced. "We are expanding our guided weapon production facilities to reflect international demand," an LIG D&A official said.
The Gumi house, included in this expansion, produces key components for the long-range surface-to-air guided missile (L-SAM), known as the Korean THAAD. As a result, the industry expects that L-SAM production capacity will also expand as a result of this rights offering and new and expanded facilities.
