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Photo = Hanwha Solutions |
[Alpha Biz= Kim Jisun] Shares of Hanwha Solutions have fallen more than 20% over two days following the company’s announcement of a KRW 2.4 trillion rights offering, raising concerns over potential losses for minority shareholders. According to an exclusive report by Korea Economic TV, the Financial Supervisory Service (FSS) has initiated an intensive review of the capital increase.
The FSS plans to closely examine the intended use of proceeds. An FSS official told Korea Economic TV that the regulator will “focus on how the funds raised through the rights offering will be utilized.”
Hanwha Solutions stated that KRW 1.5 trillion will be allocated to debt repayment, while the remaining KRW 900 billion will be used to support business growth. The company aims to reduce its debt ratio to below 150% and manage net borrowings at approximately KRW 9 trillion. It also expects to save around KRW 60 billion annually in interest expenses.
However, market analysts have expressed skepticism, noting that the impact of debt reduction may be limited and that it remains uncertain whether the capital injection will translate into tangible business performance. The FSS is also expected to scrutinize these aspects as part of its review.
Under its intensive review framework, the FSS may request revisions if disclosure standards are not met or if there are significant uncertainties from an investor protection perspective. Precedents include Hanwha Aerospace, which reduced its capital increase from KRW 3.6 trillion to KRW 2.3 trillion after multiple revisions, and POSCO Future M, which amended its filings twice to provide more detailed explanations on fund usage and additional capital requirements.
Participation by the controlling shareholder, Hanwha Corp., is also seen as a key factor in mitigating dilution concerns. Hanwha is expected to convene a board meeting soon to finalize its participation. According to Hanwha Solutions’ IR materials, the controlling shareholder is considering subscribing to more than 100% of its pro-rata allocation.
To fully participate, Hanwha would need to secure approximately KRW 700 billion in cash. As of the end of the first quarter, the company held KRW 130 billion in cash and cash equivalents, suggesting that additional financing may be required.
Meanwhile, Hanwha Solutions has announced a shareholder return policy, pledging a minimum dividend of KRW 300 and committing to allocate 10% of consolidated net income over the next five years to dividends or share buybacks and cancellations. However, ongoing losses have raised doubts about the feasibility of these commitments. The company previously reversed a dividend plan citing performance concerns.
Investor sentiment remains cautious, with concerns growing over the possibility of further capital increases. Hanwha Solutions recently increased its authorized share capital from 300 million to 500 million shares, signaling potential for additional equity financing. Brokerage firms have responded by issuing sell ratings and lowering target prices.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
