Seoul, March 27 (IANS) South Korea’s financial regulator on Thursday asked Hanwha Aerospace to submit a revised filing over its plan to raise 3.6 trillion won (US$2.5 billion) in capital through a stock sale, citing insufficient information for investors.
The Financial Supervisory Service (FSS) said it found the filing by the South Korean defence equipment manufacturer lacking in key areas, including the rationale for the rights offering, communication with shareholders and the intended use of the proceeds.
The FSS said it will thoroughly assess the revised registration once submitted to ensure the requested changes are fully reflected, reports Yonhap news agency.
In a regulatory filing a week ago, the company said the stock sale was part of its broader global investment plans in future growth sectors. The announcement triggered a sharp decline in the company’s share price due to concerns over dilution of existing shareholders’ stakes.
Market observers have noted that Hanwha Aerospace’s investment direction is promising but criticized its choice of capital increase amid the company’s already strong financial position.
Hanwha Aerospace said it intends to fully cooperate with the authorities’ request, adding that it understands it as being a procedure for a capital increase.
Hanwha Aerospace’s abrupt decision to raise $2.5 billion through a stock sale sent shock waves through the local financial market, sparking criticism over its funding strategy for future investments. In a regulatory filing the previous day, the company said the stock sale was part of its broader global investment plans in future growth sectors.
The proceeds will be used to acquire strategic production bases in Europe, the Middle East, Australia and the United States as it expects more opportunities amid a rearmament push in Europe and U.S. efforts to bolster its shipbuilding industry, it said.
Despite the company’s growth prospects, investors reacted negatively to the announcement. Experts said Hanwha Aerospace’s investment direction is promising but criticised its choice of capital increase despite the company’s strong financial position.
—IANS
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