[Funding] Gaon Jeonseon Repays Loans Through Rights Offering to Shareholders

Improving Financial Structure to Prepare for Construction Market Slump and Global Economic Uncertainty
Allocating 0.56 New Shares per Existing Share... Planning to Raise 31.4 Billion Won

[Asia Economy Reporter Hyungsoo Park] Gaon Cable is planning a rights offering to raise funds for debt repayment. The largest shareholder, LS Cable, will participate in the subscription for more than 100% of the newly allocated shares.

According to the Financial Supervisory Service's electronic disclosure system on the 23rd, Gaon Cable will raise 31.4 billion KRW through a rights offering allocating 0.56 new shares per existing share. The planned issue price of the new shares is 14,250 KRW, and a total of 2.2 million shares will be issued.

All the raised funds will be used to repay borrowings. Gaon Cable borrowed 20.2 billion KRW and 22 billion KRW respectively from Kookmin Bank and Hana Bank in February 2020. The maturity is February 2023, and the interest rate ranges from 2.15% to 2.30%.

Gaon Cable produces and sells power cables and communication cables. It provides products across all business areas of the cable industry, including high-voltage and medium- and low-voltage power cables, data cables, and optical communication cables.

In the first half of this year, consolidated sales increased by 43.3% year-on-year to 723.1 billion KRW, and operating profit rose by 127.4% to 16.4 billion KRW. The operating profit margin increased by 0.84 percentage points year-on-year to 2.26%. Performance is affected by fluctuations in copper prices. Generally, when copper prices rise, product selling prices also increase, leading to higher sales volume and improved profitability.

As of the end of the first half of this year, consolidated total borrowings stood at 204.9 billion KRW, with debt ratio and borrowing dependency recorded at 180.2% and 26.4%, respectively. Since the second half of 2020, rising raw material prices have increased working capital burdens. Inventory assets such as raw materials like copper and power lines increased from 57.1 billion KRW in 2019 to 119.3 billion KRW in the first half of this year. The price of raw material copper rose significantly, and the purchase volume of raw and subsidiary materials increased.

Total borrowings increased by about 80 billion KRW over a year and a half after recording 128.5 billion KRW in 2020. As of the end of June this year, cash and cash equivalents stood at 14.4 billion KRW, and short-term financial products amounted to 46.8 billion KRW.

It is expected that repaying long-term borrowings with the funds raised through the rights offering will improve the current ratio from 139% to 152.0%. The decision to proceed with the rights offering was made considering the prolonged downturn in major forward industries including construction and the potential increase in global economic uncertainties.

The largest shareholder of Gaon Cable, LS Cable, holds a 46.56% stake. It plans to subscribe to more than 100% of the rights offering shares. If it acquires 1,084,092 shares allocated to existing shareholders, its stake will increase by 0.94 percentage points from 46.56% to 47.50%.

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