HJ Shipbuilding & Construction, the largest shareholder, decided to proceed with a third-party allotment paid-in capital increase against Eco Prime Marine Pacific LLC. With an additional investment of a total of 200 billion won, the share price rebounded slightly in after-hours transaction on the 12th.
HJ Shipbuilding & Construction shares traded at 32,200 won in after-hours transaction at 4:30 p.m. that day. They rose 2.22% (700 won) from the regular-session closing price that day (31,500 won).
HJ Shipbuilding & Construction recorded a share-price decline of 5.55% (1,850 won) in the regular session that day, but rebounded after the market closed on news of additional investment by the largest shareholder.
HJ Shipbuilding & Construction held a board meeting that day and decided to issue a total of 7,028,394 new shares to Eco Prime Marine Pacific LLC. The amount corresponds to 8.4% of the total number of shares previously issued. The issue price per new share was set at 28,456 won based on the weighted arithmetic average price reflecting trading volumes over the past one month, one week, and the day. After the payment process, the new shares are scheduled to be listed on Oct. 28.
In general, a paid-in capital increase raises concerns about share-value dilution as the number of shares increases. In particular, when the new issue price is below the current share price, it also acts as an overhang (a potential large volume of sell orders). However, it is interpreted that investors flocked on expectations that the new shares to be issued to Eco Prime Marine Pacific LLC will be subject to a one-year lockup and that there will be no shareholder-allotted paid-in capital increase due to the fundraising.
HJ Shipbuilding & Construction plans to use about 200 billion won raised through this paid-in capital increase to pursue: ▲ improvement of the financial structure ▲ strengthening capabilities to build eco-friendly, high value-added ships ▲ expansion of investment in the defense sector, including maintenance, repair and overhaul (MRO) businesses.
Eco Prime Marine Pacific LLC sold 8,545,547 shares of HJ Shipbuilding & Construction in five tranches earlier this year. Its equity stake also fell from 66.85% to 56.59%. With this paid-in capital increase, the stake is expected to rise again to 59.97%. (☞ With favorable winds in shipbuilding and even MASGA expectations... HJ Shipbuilding & Construction FI investment recovery "jackpot")
As the shipbuilding market recovered, HJ Shipbuilding & Construction's share price also rose steeply. In particular, intertwined with the "MASGA (Make America Shipbuilding Great Again) project," a Korea-U.S. shipbuilding cooperation initiative, HJ Shipbuilding & Construction was cited as a leading candidate to operate a U.S. Navy MRO-specialized shipyard, sending the share price more than doubling in a month.