Hanwha Corporation (000880.KS) will participate in Hanwha Solutions' (009830.KS) rights offering with a 120% oversubscription.
Hanwha announced Wednesday that its board of directors approved participation in Hanwha Solutions' shareholder rights offering at a meeting held at Hanwha Building in Jung-gu, Seoul. Directors who attended the meeting reportedly determined that "based on external valuation data, participating in the rights offering is sufficiently justified from an investment return perspective when calculating Hanwha Solutions' current intrinsic value."
Hanwha will acquire all 21.12 million allocated new shares at 33,300 won per share and participate in an additional 20% through oversubscription. The total number of shares to be acquired is 25.34 million, with a payment amount of approximately 843.9 billion won ($620 million). The issue price will be finalized on June 17, and the final acquisition quantity and payment amount may change depending on the scale of unsubscribed shares.
Hanwha is 54.0% owned by Hanwha Group's major shareholders, including Chairman Kim Seung-youn and Vice Chairman Kim Dong-kwan. This has led to interpretations that the major shareholders support the plan to strengthen financial soundness and business competitiveness through the rights offering of Hanwha Solutions, a key subsidiary in which Hanwha holds a 36.64% stake.
"This measure expresses our commitment to fully support Hanwha Solutions' shareholder value enhancement plan," a Hanwha official said. "It also has the effect of reducing the burden on minority shareholders to participate in the rights offering."
Hanwha said it will fund this rights offering participation through monetization of non-core assets to ensure the company's financial stability and business capabilities are not compromised, while continuing to pursue its mid-to-long-term business strategy. "Hanwha Group plans to expand communication with shareholders of both Hanwha and Hanwha Solutions to ensure the company's fundamentals and growth strategy are fully conveyed to the market and a foundation of trust is established," the company added.
Meanwhile, financial investment industry analysts suggest that Hanwha Solutions' large-scale rights offering, to be used for securing financial soundness and future technology investments, could help the stock price in the mid-to-long term.
In fact, when Hanwha Aerospace (012450.KS) announced a 3.6 trillion won rights offering in March last year, its stock price plunged approximately 13% to close at 628,000 won. However, by late July last year when the offering was completed, the stock price had surpassed 1 million won. This year, Hanwha Aerospace shares have continued to rise, surging approximately 143% in the year since the offering announcement.
Market experts attribute Hanwha Aerospace's stock price rise to the complete restoration of market confidence as concerns about mid-to-long-term future growth were resolved. The market recognized the need for fundraising and investment to increase global market share through localization via European expansion.
At that time, Hanwha, which held a 33.95% stake in Hanwha Aerospace, also fully subscribed to its allocated rights offering shares.