Hyundai Motor Securities has crossed the threshold of the Financial Supervisory Service while pushing for a capital increase. The key going forward is the stock price in about a month. At the current stock price level, the funds raised through the capital increase are expected to decrease by about 30 billion won compared to the target.
According to the Financial Supervisory Service’s electronic disclosure system (DART) on the 10th, the efficacy of Hyundai Motor Securities' securities registration statement began on this day. This follows the correction of issues related to overseas real estate business status and capital adequacy, which the Financial Supervisory Service previously pointed out when requiring a correction of the registration statement. The fact that Hyundai Motor Securities communicated with individual shareholders and institutional investors more than 124 times via phone and over 10 face-to-face meetings also had a positive effect. The Financial Supervisory Service has recently emphasized the need for corporations to communicate with shareholders as they have consecutively put breaks on capital increases.
Hyundai Motor Securities' remaining task is the stock price. Hyundai Motor Securities plans to raise approximately 200 billion won by issuing 30,124,482 new shares. This is based on an expected issuance price of 6,640 won per new share. In the future, the final issuing price of the new shares will be determined at the lower price between the first and second issuing prices.
The first issuance price is expected to be announced after the market closes on this day. It is calculated by averaging the weighted arithmetic prices of the stock over the basis date and the previous month and week, reflecting a discount rate of 15% and a capital increase ratio of 77.72%. Based on the calculation formula, the first issuance price as of the previous day is around 5,630 won. Considering that Hyundai Motor Securities' stock price showed no significant difference from the previous day in the morning, the first issuance price is expected to be finalized at a similar level.
Based on the first issuance price, Hyundai Motor Securities can secure 169.5 billion won through this capital increase. This is about 30.5 billion won less than the target. The stock price of Hyundai Motor Securities plummeted to the 7,000 won range after the announcement of the capital increase from around 8,000 won. The second issuance price will use February 21 as the base date; if it comes out lower than the first issuance price, the amount of funds secured by Hyundai Motor Securities will decrease accordingly.
However, if the price calculated by applying a 40% discount to the weighted arithmetic average stock price from the third trading day to the fifth trading day before the subscription date (the third issuance price) is higher than the first and second issuance prices, the third issuance price will become the confirmed issuance price.
In simple terms, if the weighted arithmetic average stock price of Hyundai Motor Securities exceeds 11,000 won from February 19 to 21, the targeted funds can be secured. Even if the weighted arithmetic average stock price exceeds around 9,400 won during the same period, more funds can be secured than at the first issuance price.
The large number of newly issued shares puts pressure on the stock price, but all three major shareholders of Hyundai Motor Group have agreed to absorb the allocated amount. Based on the expected issuance prices: ▲ Hyundai Motor 5.64 million shares (37.5 billion won) ▲ Hyundai Mobis 3.49 million shares (23.1 billion won) ▲ Kia 1.01 million shares (6.7 billion won) are included.
Hyundai Motor Securities plans to use the funds raised from the capital increase as follows: 100 billion won for the first priority next-generation system development, 77.5 billion won for the second priority redeemable convertible preferred stock (RCPS), and 22.5 billion won for corporation notes repayment. The goal is to establish a 'next-generation ledger system' that forms the basis of the entire platform, from the mobile trading system (MTS) to the retirement pension system, and to strengthen capital soundness.