On the 23rd, in early trading, Daedong Gear is plunging 10% on news of a large paid-in and bonus issue.
As of 9:41 a.m. on the 23rd, on the KOSDAQ market, Daedong Gear is trading at 19,260 won, down 2,190 won (10.21%) from the previous session.
After the market closed on the 22nd, Daedong Gear disclosed that it will conduct a paid-in capital increase of about 80 billion won by issuing 5,767,800 shares (64.18% of the number of shares issued). This is on par with the current total equity (79.1 billion won), and the market is raising concerns about equity dilution due to the large capital increase.
The paid-in capital increase will proceed via a shareholder allotment followed by a public offering of forfeited shares. The record date for new share allocation is June 12, and the scheduled listing date is Aug. 11.
Of the funds raised, 50 billion won will go to facilities for producing parts for electric vehicles (EVs) and hybrid vehicles (HEVs), and 32.1 billion won will be used to build mass-production systems for electrification and powertrain parts supplied to Hyundai Transys. The company said it has secured an order backlog of about 1.4979 trillion won for EV and HEV parts for 2024–2025, and the funds will be invested in the full-scale mass production of items entering production and the expansion of precision machining lines.
Major shareholder Daedong will also participate in the paid-in capital increase, as part of responsible management. Daedong currently holds 44% equity in Daedong Gear and plans to acquire about 1.29 million shares, or about 20% of this issuance, for about 17.9 billion won. However, its equity ratio will fall to about 36% after the capital increase.
In addition, the company will also proceed with a bonus issue to enhance shareholder value. Existing shareholders will receive 0.3 new shares per share. The record date for the new share allocation is Aug. 4, and the scheduled listing date for the new shares is Aug. 24, 2026. Once the bonus issue is completed, the number of shares will increase to 19,181,916.