LG Electronics, the second-largest shareholder, is initiating a 100 billion won stockholder allocation capital increase. There are speculations that this decision may be influenced by the recent passage of the yellow envelope law (amendment to the labor union law), which has caused stock prices in the robot sector to surge, indicating favorable conditions for fundraising.
ROBOTIS shares were traded at 85,600 won on the Next Trade at 4:55 p.m. on the 28th. This was a decrease of 8.5% (8,000 won) from the regular market closing price of 93,600 won on that day.
The reason for the sharp drop in ROBOTIS stock in the after-market (from 3:40 p.m. to 8 p.m.) is largely due to the announcement of the capital increase. Since new shares are being issued, the value of existing shares is diluted.
ROBOTIS announced its capital increase plan after the regular trading session closed that day. New shares totaling 1,349,528 will be allocated to existing shareholders, and if there are any unallocated shares, a public offering will be conducted for general investors. The increase ratio is 0.1 shares per existing share.
Through this capital increase, ROBOTIS expects to raise approximately 100 billion won based on an expected issuance price of 74,100 won. Out of this, 60 billion won will be spent on building a data factory, expanding precision processing facilities, and increasing motor production facilities. The remaining 40 billion won will be used for operating costs, including research and development (R&D).
The new share issuance price is expected to be confirmed and announced on Nov. 5. The scale of the funds raised through the capital increase will vary depending on the new share issuance price. After public offerings for existing shareholders and general offerings, the new shares will be listed. Korea Investment & Securities will serve as the lead underwriter.
ROBOTIS emphasized in its securities report that as the importance of data increases in the quick transition to an intelligent robot era based on artificial intelligence (AI) technology, the establishment of a core infrastructure data factory is necessary.
It also noted that it will advance the development of next-generation products for its core product, actuators, and enhance the internalization rate of components to reduce production costs, responding to the low-cost offensive from Chinese corporations.
ROBOTIS explained that it reviewed various funding options, such as issuing convertible bonds (CB), third-party allocation capital increases, and borrowing, but deemed them inappropriate, leading to the decision to choose a stockholder allocation capital increase.
ROBOTIS stated, "It was determined that pursuing a capital increase through a public offering of unallocated shares after allocating to shareholders was the most appropriate for protecting shareholder rights and ensuring fundraising stability."
However, contrary to ROBOTIS's explanation, some shareholders are expressing dissatisfaction with the sudden capital increase. They reacted by saying it felt like a "betrayal" since the company's stock had sharply risen amid expectations of increased automation investments from corporations following the recent yellow envelope law.
ROBOTIS stock hit a record high, rising from 75,900 won on the 21st to 108,600 won during trading on the 26th. Afterward, shares moved around the 90,000 won mark as profit-taking selling pressure emerged.