Seoul: Hanwha Aerospace Co., a prominent South Korean defense company, announced on Tuesday that it has submitted a revised share sale plan to raise 2.3 trillion won (approximately US$1.56 billion) following a request from the financial regulator.
According to Yonhap News Agency, the company initially aimed to generate 3.6 trillion won through a stock sale. However, the Financial Supervisory Service (FSS) required a revision due to insufficient information for potential investors. To address the 1.3 trillion won shortfall, Hanwha Aerospace plans to issue new shares to three affiliates within the Hanwha Group: Hanwha Energy Corp., Hanwha Impact Partners Inc., and Hanwha Energy Corporation Singapore Pte., as detailed in a regulatory filing.
The FSS highlighted several deficiencies in the original plan, including inadequate rationale for the rights offering, insufficient communication with shareholders, and unclear intentions for the use of proceeds.
Hanwha Aerospace explained that the rights issue is aligned with its broader strategy to invest globally in future growth sectors within the defense industry. The funds raised are earmarked for acquiring strategic production facilities across Europe, the Middle East, Australia, and the United States. This move is in anticipation of increased opportunities driven by a rearmament push in Europe and efforts by the U.S. to strengthen its shipbuilding industry.
Following the announcement, Hanwha Aerospace's shares saw a significant increase of 5.92 percent to 680,000 won by 9:25 a.m., outperforming the broader Korea Stock Price Index's (KOSPI) rise of 1.46 percent. The stock's surge reflects investor relief over reduced concerns about the dilution of existing shareholders' stakes.