The Financial Supervisory Service (FSS) said it would strictly review the securities registration statement for the spin-off of Samsung Biologics in accordance with the 'key review' guidelines. The plan for Samsung Biologics to spin off was expected to take longer than anticipated in the preliminary review for re-listing by the Korea Exchange, and with the FSS also warning of a strict review, the authorities must again overcome the review threshold.
According to financial authorities on the 29th, the FSS is currently reviewing the securities registration statement that Samsung Biologics disclosed on the 22nd.
An FSS official noted, "Since the spin-off of Samsung Biologics is not a paid-in capital increase, it cannot, in principle, be a target for key review, but considering the significant public interest in Samsung Biologics, we will examine it as if it were a key review."
It is expected that the FSS will take a comprehensive look at the impact of the spin-off on investors, as well as the potential restructuring of the group's governance structure after the spin-off. Accordingly, the possibility of the FSS's review becoming lengthy is also emerging.
Samsung Biologics initially planned to hold a shareholders' meeting for the approval of the spin-off plan on September 16, but the preliminary review by the Korea Exchange was delayed, pushing it back to October 17.
From the perspective of investor protection, attention is likely to be drawn to the approximately 1.5 times increase in the debt ratio of Samsung Biologics due to the spin-off. As of the end of the first quarter, Samsung Biologics had a debt ratio of 39%, but after the spin-off, Samsung Bioepis and 100 billion won in cash will be transferred to Samsung Bioepis Holdings, raising the company's debt ratio to 59.9%. While this ratio is not absolutely high, it could affect financial stability depending on future performance.
The necessity and uncertainty regarding the spin-off are also expected to be major review items. The FSS previously required multiple corrections centered on specific plans for the use of funds when reviewing Hanwha Aerospace's large-scale paid-in capital increase.
Samsung Biologics plans to establish a new subsidiary under the newly created holding company Samsung Bioepis Holdings through the spin-off, but the lack of a specific business plan for the new entity could also become a point of contention during the review process. If the FSS determines that the company has not actively disclosed investment information in this regard, it could demand that the company provide specific information.
Under current law, to be recognized as a holding company, it must possess two or more subsidiaries. Samsung Bioepis Holdings will only inherit Samsung Bioepis as its subsidiary, thus it must establish a new subsidiary to secure two or more subsidiaries.
With regard to governance restructuring, Samsung Biologics will not engage in duplicate listings for the next five years and has assured the Korea Exchange that it will not undertake any governance restructuring that contradicts the purpose of the spin-off, so no significant issues are anticipated. However, if the FSS determines that restructuring attempts through other means are possible, it may require explanations and supplements.
Samsung Biologics announced plans in May to spin off its subsidiary Samsung Bioepis Holdings and establish the newly formed company Samsung Bioepis Holdings. This decision was made based on the assessment that the current structure, which places Samsung Bioepis, a company engaged in the production of biosimilars (copies of biopharmaceuticals), under Samsung Biologics, which operates a contract development and manufacturing organization (CDMO), could lead to conflicts of interest with clients.
The spin-off allows existing corporate shareholders to proportionately hold equity in the newly established entity, which means that concerns about investor harm are relatively low. For this reason, the spin-off of Samsung Biologics is expected to proceed smoothly.
However, as the preliminary review for re-listing by the Korea Exchange has elongated, the schedule has been delayed more than expected. The FSS is also expected to concentrate on reviewing the spin-off plan of Samsung Biologics, leading to predictions of difficulties with the original plan.
A capital market industry official said, "Given that the FSS has signaled an intensive review, there is a view that multiple corrections will be sought," adding, "Samsung Biologics, which could not evade the FSS's scrutiny in the past due to concerns over accounting fraud and under the progressive administration, is set to undergo another concentrated review by the FSS."