Industry officials said Tuesday that SKC is pursuing a 1 trillion won offering, but recent volatility has raised concerns that the final offering price could come in lower than expected, reducing proceeds.
SKC plans to invest 590 billion won of the funds in its glass substrate business and use 410 billion won to repay debt. The company expects its debt-to-equity ratio to fall to about 142% from 233% after the offering, though the extent of improvement and the pace of investment will depend on how much money is ultimately raised.
Some investors worry that a lower issue price would shrink funding and force cuts to investment in future businesses such as glass substrates. SKC shares, which had traded in the 100,000-won range, fell to the 80,000-won range after the offering was announced. The first issue price was set at 70,600 won per share. The company will set a second issue price by applying a 20% discount to the May 11 share price, then finalize the lower of the two as the issue price.
Hanwha Solutions’ offering was reduced to 1.8 trillion won from 2.4 trillion won after the Financial Supervisory Service on April 9 requested revisions to its securities registration statement. The company adjusted planned debt repayment to 900 billion won from 1.5 trillion won. The number of new shares also fell to 56 million from 72 million, lowering the dilution rate to 24.6% from 29.5%.
Still, uncertainty remains until the regulator completes its review and the schedule is finalized.
Hanwha Solutions held an investor relations session for analysts Monday to explain why it says the offering is unavoidable. The company said it has carried out about 3.9 trillion won in balance-sheet improvements through noncore asset sales and equity-like financing, and reiterated that additional self-help measures are limited.
Both companies cite future growth as the rationale. SKC plans to expand its semiconductor materials business centered on glass substrates as it accelerates a portfolio shift. Hanwha Solutions aims to ease financial strain amid a weak solar market while pursuing mid- to long-term investments including its U.S. “Solar Hub.”
Some investors, however, have criticized the offerings as using shareholder money to pay down company debt. Lee Chang-min, a professor of business administration at Hanyang University, said, “A recurring problem in recent rights offerings by Korean companies is that explanations of the need for funding and reviews of alternatives are not sufficient,” adding, “In particular, it is hard to view positively a structure in which a large portion of the funds is used for debt repayment.”
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.