HYUNDAI HEAVY PLUNGE ON RIGHTS ISSUE PLAN
Hyundai Heavy plans to raise about 1.29tril won for working capital after struggling with declining orders
HYUNDAI Heavy Industries Co, the world’s second-biggest shipbuilder, fell by a record following its plan to raise about 1.29 trillion won (RM4.88 billion) selling new shares for working capital.
Hyundai Heavy intends to sell 12.5 million new shares before the end of March at an estimated price of 103,000 won each, a discount of about 24 per cent to the closing level on Tuesday.
The stock shed 29 per cent to close at 96,900 won, here, yes- terday, the largest decline since the firm was listed on South Korea’s main board in August 1999.
The fundraising plan comes as Hyundai Heavy and other shipyards struggle with declining orders amid overcapacity and weak oil prices, forcing companies to reform and spin off some businesses.
Hyundai Robotics, the holding company of Hyundai Heavy Industries Group that was created as part of a restructuring, separately unveiled a plan for an initial public offering (IPO) for its oil-refining unit, Hyundai Oilbank Co.
“Hyundai Heavy is using the share sale to raise funds it will need as the industry recovers,” said Park Moo-hyun, an analyst at Hana Financial Investment Co, here, yesterday.
“The dearth of orders last year is causing it to have a temporary mismatch in its cash flow amid signs of orders coming back. That will be resolved as it wins more orders.”
The final price for the sale, which is open to both new and existing retail and institutional investors, would be determined on March 5, said Hyundai Heavy after the market’s close on Tuesday.
Shares of Hyundai Robotics, the largest shareholder of Hyundai Heavy, fell 3.7 per cent to 360,500 won.
Hyundai Mipo Dockyard Co, another shipbuilding unit of Hyundai Heavy Industries Group, lost 16 per cent to 77,700 won. It projected an operating loss in the fourth quarter.
Hyundai Robotics, which owns 91.1 per cent of Hyundai Oilbank, would select a lead manager for the IPO with a goal of listing the oil refiner on the Korea Exchange in the second half of next year, said the group. Hyundai Robotics intends to use the funds raised to strengthen its finances and invest in new businesses.
“The last pieces of the puzzle in the whole revamp effort are coming together,” said Hyundai Heavy Industries Group yesterday.
“Hyundai Heavy’s share sale plan will help the firm move forward with efforts to improve its financials. The group’s structure will also become more transparent with the IPO of Hyundai Oilbank.”
Hyundai Heavy plans to use the money from the new-share sale to repay debt and to invest in research and development. Hyundai Robotics will buy 3.34 million of the new shares. Bloomberg