After 2 Years Again... Will Intellian Tech Succeed in Rights Offering?

Subscription for Existing Shareholders on July 5-6... Targeting 90.1 Billion KRW Fundraising
Shareholder-Allocated Capital Increase After 2 Years Causes Shareholder Dissatisfaction
Optimistic Industry Growth Outlook... Growth Expected Through Proactive Investment

Intellian Technologies, a developer of maritime satellite communication antennas, is issuing new shares to its shareholders to raise research and development (R&D) funds. The new share issuance price will be finalized on the 30th, and subscription will be accepted for two days starting from the 5th of next month. The largest shareholder will participate in the subscription for only 30% of the allocated shares. With the subscription start date for existing shareholders just a week away, the success of the subscription remains uncertain.

According to the Financial Supervisory Service, Intellian Technologies, which is conducting a rights offering, will issue 1,546,000 new shares to raise 90.1 billion KRW. The allocation ratio is 0.167 new shares per one existing share.

The current stock price is 71,000 KRW, about 21.8% higher than the first issuance price of 58,300 KRW in the rights offering. Considering the risk of a large volume of sell orders on the new shares' listing day, the attractiveness of the new share price compared to the current stock price level is not very high.

Intellian Technologies' stock price plunged 20% immediately after the company's board of directors resolved the rights offering on April 21. After a short-term rebound, the stock price fell again as the largest shareholder disposed of some of their shares through a block deal (off-market large-volume sale) to raise funds for the new share subscription. CEO Seong Sang-yeop, the largest shareholder, and Intellian Systems, the second-largest shareholder, sold 156,000 and 60,000 shares respectively to raise subscription funds and repay part of existing stock-backed loans. The shares were sold at 63,664 KRW per share after the market closed on the 30th of last month, applying an 8.0% discount to the closing price of that day. CEO Seong and Intellian Systems plan to subscribe to at least 30% of their allocated shares. After the capital increase, CEO Seong's shareholding ratio will decrease by 3.59 percentage points from 21.11% to 17.52%. Intellian Systems' shareholding ratio is also expected to decrease by 1.35 percentage points.

Previously, Intellian Technologies raised about 70 billion KRW through a rights offering in May 2021. The decision to raise capital again after two years, along with the largest shareholder selling part of their stake, has caused dissatisfaction among shareholders.

An industry insider said, "The price at which the largest shareholder sold is higher than the new share issuance price," adding, "There are various ways to raise funds, so it is regrettable that they chose to conduct another rights offering." They further commented, "Considering Intellian Technologies' position in the satellite antenna market and the industry's growth potential, there were likely other options to raise funds."

However, market experts analyzed that Intellian Technologies' bold decision to invest in R&D is inevitable given the rapidly increasing demand for satellite communication antennas. Intellian Technologies plans to use the funds raised through the rights offering to develop flat panel antennas, gateway antennas, and maritime distress safety wireless communication equipment. Some of the funds will be used to purchase raw materials and repay borrowings.

The market for low Earth orbit (LEO) and medium Earth orbit (MEO) satellite communications using satellite constellations is growing rapidly. Investments aimed at eliminating global internet shadow zones through satellites are increasing. LEO satellite communication, based on high speed, can be used not only in areas beyond the reach of existing terrestrial communication networks but also as a new communication method in areas where terrestrial networks are established. Intellian Technologies develops and supplies antennas that support various services.

Shim Eui-seop, a researcher at NH Investment & Securities, said, "the maritime satellite communication antenna market is expected to grow at an average annual rate of 6.2% until 2031," adding, "The installation rate on large vessels in 2021 was about 31%, and it is expected to steadily increase." He further explained, "The flat panel antenna market, which Intellian Technologies is focusing its R&D on, is gaining attention as it coincides with the emergence of the LEO satellite communication market," calling it "a preemptive investment strategy to capture the emerging market."

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