LS Corp. held a corporate briefing on the 20th at LS Yongsan Tower in Seoul to share the background of pursuing an Essex Solutions initial public offering (IPO) and the business status, and to communicate with shareholders. The event was organized to emphasize to shareholders the need for the IPO and to address controversy over duplicate listings.
On the day, Executive Managing Director Lee Tae-ho, LS chief financial officer (CFO), said, "Essex Solutions, which used to be listed on Nasdaq, is the No. 1 winding wire corporation in the world, and if it is relisted on the KOSPI, it will be a new investment opportunity for domestic investors," and added, "If we expand the planned production facilities with funds raised through the IPO, generating profits in the hundreds of billions of won will be possible, which we expect will positively affect LS's consolidation results."
Essex Solutions, which LS acquired in 2008, is a U.S. corporation that had been listed on Nasdaq and currently ranks No. 1 in market share in the global winding wire market, including the United States and Europe. Winding wire refers to wire used by winding it into coils to conduct electricity in electric motors, transformers, and the like.
Essex Solutions, which has established production bases in 11 countries including North America, Europe, and Asia, produces high-output specialty winding wires for electric-vehicle drive motors. The company explained that orders for specialty winding wire for transformers that Essex Solutions manufactures are surging in line with replacement demand for transformers in the United States.
An LS official said, "To expand production facilities for specialty winding wires for electric vehicles and transformers, Essex Solutions needs large-scale facility investment of more than 600 billion won from this year through 2029," and added, "If we successfully carry out the IPO, we will secure the investment funds without additional borrowing, contributing to securing the financial soundness of LS, the parent company."
Shareholders who attended the briefing that day pointed out whether Essex Solutions' listing amounts to a split listing or duplicate listings. The ownership structure runs "LS (95.4%) → LS I&D (100%) → Superior Essex (78.95%) → Essex Solutions." If Essex Solutions, a "great-grandchild company" of holding company LS, lists, there is concern that duplicate listings within affiliates could dilute LS's corporate value and harm existing LS shareholders.
In response, the company said, "Essex Solutions falls under a relisting by acquisition. This is a case where a company listed on the U.S. Nasdaq was delisted when LS acquired 100% equity and is being relisted on the domestic market."
LS said it will also proceed without a hitch with shareholder returns for existing shareholders. Earlier, LS disclosed that it would cancel 1 million treasury shares, equivalent to 3.1% of total shares outstanding, on Aug. It has completed the cancellation of half, or 500,000 shares, and plans to cancel the remaining 500,000 shares in the first quarter of next year.
It plans to raise return on equity (ROE), a management efficiency metric, from 5.1% at the end of last year to 8%. It will increase dividends by more than 5% each year to lift the dividend to more than 30% by 2030.
Essex Solutions has submitted a preliminary listing eligibility review application for the stock market (KOSPI) to the Korea Exchange (KRX).