[Public Notice+] Sehwa IMC "57 Billion Won Capital Increase... Securing Financial Soundness to Reclaim Global Leader Position"

[Asia Economy Reporter Hyunseok Yoo] Sehwa IMC, which announced a large-scale paid-in capital increase plan after resuming trading, aims to secure financial soundness through a successful capital increase and reclaim its status as a global leader in the tire mold sector.

The tire mold specialist Sehwa IMC stated on the 24th, "This paid-in capital increase plan was a necessary decision to repay debts accumulated under the previous management and to purchase factory land," adding, "We expect to see not only strengthened financial soundness through a successful capital increase but also an increase in asset value."

Earlier, the company announced on the 20th that it decided on a paid-in capital increase through a rights offering to shareholders followed by a general public offering of unsubscribed shares, totaling 57.1 billion KRW. The planned issue price is 816 KRW, and the new shares are scheduled to be listed on October 6. The underwriting is handled by Ebest Investment & Securities, which will fully underwrite any unsubscribed shares.

Sehwa IMC is considering establishing a large-scale production base in Indonesia to expand profitability in the tire mold business and secure global competitiveness. However, financial instability is acting as a constraint in pursuing this through a joint venture with a local major company, making securing financial soundness an urgent priority. Additionally, the new mask business with an annual production capacity (CAPA) of 500 million units is expected to enable large-scale supply contracts, leading to new revenue generation.

A company official said, "Upon successful completion of this capital increase, we will repay short- and long-term borrowings that cause interest expenses," adding, "The debt ratio, which was 469.4% as of Q1 2020, will be drastically reduced to around 35.6%, effectively achieving debt-free management."

With the success of this capital increase, it will also become possible to purchase the 21,000-pyeong (approximately 69,420 square meters) headquarters factory site located in the Gwangju Metropolitan City High-tech District, currently leased from LH Corporation. The company holds a preemptive purchase right under a long-term land lease contract with LH Corporation, allowing it to buy the land below market price. After purchase, this is expected to significantly increase asset value and reduce lease costs, improving the financial statements and serving as a stable lever for new investments, the company said.

Sehwa IMC aims to strengthen the competitiveness of its core tire mold business and make a leap forward as a global leader. The company stated, "As a company with 40 years of experience, we are concentrating all our efforts on sales activities such as new orders and market development to regain our status as the global number one," adding, "Inquiries for new orders from global tire manufacturers are also increasing."

Regarding the decision on the rights offering, the company said, "We decided on the rights offering to share with shareholders the expected increase in corporate value through continued profit generation based on improved financial soundness." It also added, "Major shareholder Woosung Corporation plans to actively participate in the capital increase to establish a stable management foundation."

Sehwa IMC, whose trading was suspended on the Korea Exchange since February 2018 due to embezzlement and breach of trust issues involving the previous management, replaced its management entirely and focused on normalizing operations after Woosung Corporation, a small but strong industrial fuel oil company, became the largest shareholder at the end of last year. As a result, much of the financial uncertainty caused by the previous management’s embezzlement and breach of trust charges has been resolved, and the company achieved a turnaround to profitability in Q1 after ten consecutive quarters of losses, alleviating concerns about going concern. The company’s stock trading resumed on May 26.

Son Odong, CEO of Sehwa IMC, said, "Both the largest shareholder Woosung Corporation and all company executives and employees are making every effort with a strong sense of responsibility to achieve management performance," adding, "We will do our best to build a trusting relationship with shareholders under the goal of 'enhancing shareholder value.'"

This content was produced with the assistance of AI translation services.