SEOUL (Reuters) -South Korea’s financial market watchdog said on Tuesday that Hanwha Aerospace needed to better explain how a proposed 3.6 trillion won ($2.46 billion) equity raising fits with a broader plan to restructure the company.
The Financial Supervisory Service (FSS) last week blocked the defence company’s controversial capital raising plans on the grounds its filing lacked information needed for shareholders to make rational investment decisions, and ordered it to submit a revised filing.
“The ownership restructuring of affiliates and its relevance to the share issue plan, as well as the impact of the restructuring on the firm should be sufficiently noted,” FSS Senior Deputy Governor Hahm Yong-il told a briefing.
On March 21, a day after the plan was announced, shares in Hanwha Aerospace posted their worst session since early November 2016, sinking 13%, as analysts raised questions over the intent and need for raising capital.
Hanwha Group, South Korea’s seventh-largest conglomerate, announced on Monday that Chairman Kim Seung Youn was giving an 11.32% stake in Hanwha Aerospace’s parent, Hanwha Corp, to his sons as part of a succession process.
Hanwha Aeropsace said on Tuesday its executives, including one of Kim’s sons, purchased about 9 billion won worth of shares in the company to show their will to raise shareholder value.
The controversy over Hanwha’s share issue plan was the latest in a series of large capital-raising plans, including ones by battery maker Samsung SDI and Korea Zinc, that were met by investor criticism amid South Korea’s broader push for corporate governance reforms.
Shares in Hanwha Aerospace jumped 7.5%, while the benchmark KOSPI stock index was up 1.8% as of 0445 GMT.
(Reporting by Jihoon Lee; Editing by Jamie Freed and Gerry Doyle)
