[Funding] STCube, Underwriters Anxious Over Rising Issue Price

Issuance Price Increased by 22% Compared to Capital Increase Board Resolution
Difference Between Initial Issuance Price and Current Stock Price Not Significant

[Asia Economy Reporter Hyungsoo Park] ST Cube is facing increasing concerns as market volatility rises while it is pushing for a large-scale fundraising. The warning signs have appeared due to the small difference between the initial offering price and the current stock price, which may affect subscription success.

According to the Financial Supervisory Service's electronic disclosure system on the 2nd, ST Cube set the initial offering price at 4,735 KRW in a rights offering followed by a general public offering for unsubscribed shares. This initial offering price is about 22% higher than the 3,875 KRW expected at the time of the board resolution. The fundraising scale could increase from 44.6 billion KRW to 54.5 billion KRW.

The initial offering price was calculated by applying a 25% discount to the lower amount between the arithmetic average of the one-month weighted average price, the one-week weighted average price, and the closing price on the base date, which is the third trading day prior to the new share allocation standard date, and the closing price on the base date. The final new share issuance price will be confirmed three trading days before the subscription date for existing shareholders.

If the offering price rises and the fundraising amount increases, it could positively impact ST Cube’s financial soundness. If the subscription falls short even after the general public offering for unsubscribed shares, the remaining shares will be fully underwritten by the lead managers, KB Investment & Securities and Hanyang Securities, so a higher offering price is advantageous. Even after paying the underwriting fee for the remaining shares, the fundraising scale could be larger than originally planned.

ST Cube’s subscription period is from the 19th to the 20th. If the current stock price level is maintained until the subscription date, there is a risk of unsubscribed shares occurring. Considering the potential sell-off volume after the capital increase is completed, the subscription enthusiasm may not be high.

The largest shareholder, Biomedical Holdings, and its special affiliate ST Science partially sold their allocated new share subscription rights. Biomedical Holdings sold 408,197 shares at 610 KRW per share, cashing in 250 million KRW. They planned to participate in only about 20% of the allocated shares in the capital increase. After the rights offering, Biomedical Holdings’ shareholding ratio is expected to decrease from 4.62% to 3.60%.

If a large number of unsubscribed shares occur and the underwriters fully subscribe to them, the largest shareholder could change. ST Cube plans to issue 11.5 million new shares, and the underwriting scale by the lead managers will be determined depending on the subscription rate and the success of the general public offering for unsubscribed shares.

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