South Korea’s Financial Supervisory Service (FSS) has called on Hanwha Aerospace to provide further details regarding its proposed 3.6 trillion won ($2.46 billion) equity raising initiative, citing concerns over the transparency of the plan within the context of the company’s larger restructuring strategy.
The FSS, which last week halted the defense company’s controversial capital raising proposal, pointed out that the initial filing lacked essential information, making it difficult for shareholders to make informed investment decisions. The agency has instructed Hanwha Aerospace to submit a revised filing that clearly outlines the relationship between the ownership restructuring of affiliates, the capital raising plan, and how these changes would affect the company’s future.
Hahm Yong-il, Senior Deputy Governor of the FSS, emphasized during a briefing that the impact of the restructuring on the firm, and how it connects to the share issuance, must be comprehensively explained.
The proposed capital raise has raised concerns among investors, with Hanwha Aerospace’s shares plunging 13% on March 21, the day after the plan’s announcement. This marked the company’s worst performance since November 2016, as analysts questioned the necessity and strategic intent behind the move.
Adding to the controversy, Hanwha Group, South Korea’s seventh-largest conglomerate, revealed on Monday that Chairman Kim Seung Youn had transferred an 11.32% stake in Hanwha Aerospace’s parent company, Hanwha Corp, to his sons as part of a broader succession plan.
In response to the growing scrutiny, Hanwha Aerospace announced that its executives, including one of Chairman Kim’s sons, had purchased approximately 9 billion won worth of shares to demonstrate their commitment to enhancing shareholder value.
The ongoing dispute over the capital raising plan is part of a broader trend of investor pushback against major capital initiatives in South Korea, including recent proposals by battery maker Samsung SDI and Korea Zinc. These moves have come amid the country’s ongoing push for corporate governance reforms.
Related topics:
