[Funding] Hanchang's Subscription Schedule Delayed Amid Urgent BW Issuance

[Asia Economy Reporter Hyungsoo Park] Hanchang's fundraising plan is facing setbacks. While attempting to raise a large amount of funds by publicly issuing bonds with warrants (BW), the schedule continues to be delayed due to successive amendments to the securities registration statement.

According to the Financial Supervisory Service's electronic disclosure system on the 31st, Hanchang held a board meeting on October 25 last year, resolved the agenda to issue BW, and submitted the securities registration statement on October 27 of the same year. The securities registration statement was amended on November 19, November 30, December 16 of last year, and March 25 of this year, respectively.

The original plan was to complete fundraising by the end of November last year, but due to the regulatory authority's requests for amended submissions of the securities registration statement and schedule changes, the subscription dates were postponed to June 7 and 8. The effective date of the securities registration statement submitted on the 25th is scheduled for the 6th of next month.

Hanchang will issue BW applying a nominal interest rate of 2.00% per annum and a maturity guaranteed yield of 4.00% per annum compounded quarterly on the bonds. The raised funds will be used for operating capital to promote new businesses and to repay borrowings of its affiliate Hanyeon Development.

Since March last year, it has started the steel distribution business. It supplies steel raw materials such as domestic rebar, imported rebar, H-beams, other shaped steel, and steel plates to Aronvest, Seowon Industry, Daebo Industry, and others. The steel distribution business generates monthly sales exceeding 1 billion KRW. Among the public offering funds, 3 billion KRW will be used to purchase raw materials related to the steel distribution business.

It is also promoting a live commerce (D2C) business. The D2C business structure connects sellers directly with consumers to provide products. It plans to purchase domestic and international products and sell them directly to consumers through its own platform. 5 billion KRW will be used to purchase products to be sold on the platform. It will invest 5.7 billion KRW to build a waste synthetic resin processing plant in Jindo-gun.

A company official explained, "We will expand investment in ESG business sectors such as low-temperature pyrolysis of waste plastic, which is being promoted as a new business," adding, "This will accelerate securing future growth engines."

Funds will be disbursed to Hanyeon Development in the form of loans so that it can repay 10.4 billion KRW and 2.3 billion KRW borrowed from the Credit Cooperative and Korea Investment Savings Bank, respectively.

If the planned funds are not raised through the BW subscription results, the repayment period of borrowings will be extended or payments will be made using cash generated from its own operations. Hanchang recorded sales of 35.2 billion KRW and an operating loss of 4.7 billion KRW last year. Although sales increased by about 10 billion KRW compared to the previous year, the scale of operating loss grew. As the profitability of existing business divisions deteriorated, the need to promote new businesses increased. The decision to issue BW was made to secure funds for promoting new businesses. The maximum shareholder's stake is only 7.48%, so methods that could dilute the maximum shareholder's stake, such as third-party allotment rights offerings, were not adopted.

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