Hanwha Solutions asserted that the 2.4 trillion won rights offering released on the 26th would, over the medium to long term, help raise shareholder value. The company is seen as emphasizing that the rights offering was an unavoidable choice to secure financial soundness and acquire future new technologies, after shareholders reacted strongly against it.
According to the energy industry on the 30th, Hanwha Solutions said on the 27th that Korea Ratings positively assessed the rights offering in a report it released.
Korea Ratings said in the report that "capital expansion and debt repayment will be achieved through the rights offering, easing Hanwha Solutions' financial burden." It also analyzed that "profitability is expected to improve starting this year, considering the localization of revenue through full-process normal operation at the Cartersville plant in the solar institutional sector and the expansion of subsidies received."
Hanwha Solutions' business structure is divided into petrochemicals, which handles the petrochemical business, and Qcells, which handles the solar business, and both businesses are underperforming. The petrochemical business is struggling due to China's oversupply, and the solar business is facing difficulties due to weakened demand in the United States. Hanwha Solutions posted an operating loss of 364.8 billion won last year, and its liability ratio was 196%.
Hanwha Solutions said that once the rights offering is completed, this year's consolidation-based liability ratio will be below 150%, and net debt can be managed at around 9 trillion won. Over the long term, it plans to strengthen financial soundness by managing the liability ratio at 100% and net debt at around 7 trillion won by 2030.
Hanwha Solutions stressed that if the debt is not repaid, the 1.8 trillion won refinancing burden will grow and the rise in funding rates will also damage corporate value. Hanwha Solutions' position is that if its credit rating is downgraded or if it makes large-scale borrowings in the capital market, financial expense will increase and external credibility will also worsen, lowering shareholder value.
A Hanwha Solutions official said, "Over the next four years, we plan to generate 13.8 trillion won in operating cash flow and allocate 600 billion won as resources for shareholder returns," adding, "Additionally, we plan to use 6 trillion won and 7.2 trillion won for financial structure improvement and corporate operations and investment expenditure (OPEX·CAPEX), respectively."
It also emphasized that 900 billion won of the funds raised through the rights offering will be invested in the solar field. Hanwha Solutions will switch solar silicon cells from PERC to TOPCon and invest 8 trillion won in research and development to mass-produce tandem cells, a stacked solar cell. It plans to invest 100 billion won to build a tandem cell pilot line.
Hanwha Solutions entered the solar business in 2010 and operated in major markets around the world, including the United States, Europe, Korea, Japan and Australia. In 2019, it built a module plant in Dalton, Georgia, preparing to be the only company in the United States capable of handling the entire process from ingots to wafers, cells and modules within a single complex.
Qcells plans to maximize the synergy of its two facilities in Dalton and Cartersville in Georgia, starting from the resumption of plant operations at the end of last year. The Cartersville plant will have production capacity of 3.3 gigawatts (GW) for ingots, wafers and cells by the end of 2026. Combined with the existing module production capacity (5.1 GW) of the Dalton plant, the company will be able to produce a total of 8.4 GW of solar products in Georgia alone.
Along with this, Hanwha Solutions said that four outside directors, including board chair Jang Jae-su as well as Song Kwang-ho, Bae Seong-ho and Lee Ah-young, will voluntarily buy shares. Earlier, key executives, including Vice Chair Kim Dong-Kwan, also released a plan to purchase equity worth 4.2 billion won.
However, despite Hanwha Solutions' claims, criticism of the rights offering continues in financial markets and political circles. Because of the large-scale offering, existing shareholders face equity dilution, which is a negative factor. DS Investment & Securities on the 27th issued a "sell" recommendation on Hanwha Solutions and also cut its target price from 47,000 won to 25,000 won.