On the 22nd, in early trading, BECU AI plunged 22% on news it will proceed with a 5-to-1 par value reduction without consideration to offset accumulated losses.
As of 9:12 a.m., BECU AI is trading on KOSDAQ at 773 won, down 227 won (22.7%) from the previous session.
After the market closed the previous day, BECU AI said it would carry out an 80% par value reduction without consideration by consolidating five common shares into one. After the reduction, capital will decrease from 15.7 billion won to 3.1 billion won. The number of shares outstanding will also fall from 31.44 million to 6.29 million.
The purpose of this par value reduction without consideration is to improve the financial structure by offsetting accumulated losses. A par value reduction without consideration reduces capital and offsets the same amount of accumulated losses, easing capital impairment on the financial statements and normalizing the capital structure.
However, because no cash actually flows in and the company's intrinsic value does not improve, a reduction for the purpose of offsetting losses is generally taken as a signal of financial weakness and tends to weigh on the share price.
Whether to implement the par value reduction without consideration will be finalized at the shareholders meeting on Jun. 29, and the scheduled listing date for the new shares is Aug. 4.