Hanwha Solutions plunged more than 16% intraday on the 26th. Investor sentiment appears to have weakened on news that the company decided on a shareholder-allotted paid-in capital increase worth 2.5 trillion won. As of 2:50 p.m. that day, Hanwha Solutions was trading on the Korea Exchange at 37,350 won, down 7,650 won (17.00%) from the previous session.
Hanwha Solutions disclosed it decided on a 2.5 trillion won paid-in capital increase, issuing new shares to existing shareholders to raise funds. Of the proceeds, 907.7 billion won will go to facility investment and 1.4899 trillion won will be used for debt repayment.
The record date for the new share allocation is May 14, and the issue price will be finalized on June 17. Subscriptions for existing shareholders will run for two days starting June 22, and the subscription period for a public offering of forfeited shares is June 25–26. The scheduled listing date for the new shares is July 10.
A paid-in capital increase is a method by which corporations raise funds by issuing new shares, and if new shares are issued and the number of shares increases, there is a high possibility that existing shareholders' equity value will be diluted. Concerns among shareholders have grown in particular because the purpose of the fundraising is debt repayment.
Previously, Hanwha Solutions secured funds through asset sales and bond issuance, but as global solar and chemical market conditions slowed and results deteriorated, it moved to raise additional capital.