"Our company plans to continue pursuing this paid-in capital increase, but the specific schedule for the increase is currently undecided and will be disclosed as soon as the details are finalized."
Hanwha Solutions has effectively postponed its large-scale paid-in capital increase plan indefinitely. This decision came just a day after the Financial Supervisory Service publicly pressured the company, stating that "the explanation for why there were no other ways to raise funds besides the paid-in capital increase was insufficient."
According to the Electronic Disclosure System of the Financial Supervisory Service on the 12th, Hanwha Solutions revised and publicly disclosed its securities report submitted last March, which contained the decision for the paid-in capital increase, changing all previously confirmed schedules to 'undetermined.' As a result, the entire paid-in capital increase process, including the new share allocation base date scheduled for the 14th, as well as subscriptions and payments at the end of June, has been temporarily suspended. A paid-in capital increase is a method by which a company issues new shares to expand its capital. However, since it dilutes the value of shares held by existing shareholders, it is generally perceived negatively in the market.
This decision appears to have been triggered by Hwang Seon-o, Deputy Governor of the Financial Supervisory Service, who unusually disclosed the background of two correction requests at a briefing on capital market issues the previous day (11th). Hwang stated that Hanwha Solutions "lacked sufficient grounds regarding the reality of liquidity risk and performance prospects, as well as explanations on whether there were truly no other ways to raise funds besides the paid-in capital increase." He also warned that "if it is judged that necessary information for investment sales has not been properly recorded in the securities report, continuous correction requests will be inevitable."
Previously, Hanwha Solutions announced a capital increase plan of 2.4 trillion won in March. However, it faced criticism for "burdening shareholders" after revealing that over 60% of the funds raised, or 1.5 trillion won, would be used to repay debt. Following the Financial Supervisory Service's first correction request on April 9th, the company reduced the scale of the increase to 1.8 trillion won and lowered the amount for debt repayment to 900 billion won. However, this was still insufficient to meet the regulatory standards.
The Financial Supervisory Service particularly raised concerns about Hanwha Solutions' assets, including real estate and stakes in affiliates, which amounted to over 5 trillion won. The agency judged that despite having sufficient liquid assets, the company was attempting to profit solely from shareholders without making any self-rescue efforts through asset sales.
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Let's start easing up a bit now
