LK Samyang Bets on Rights Offering Amid Sluggish Sales

Rights Offering of 24 Billion Won to Secure Operating Funds and Repay Debt
Expanding Lens Lineup Based on High-Precision Lens Processing Technology
Lead Manager to Acquire Unsubscribed Shares if Any Remain

LK Samyang, a developer of interchangeable camera lenses, is set to raise a large amount of capital. The company has experienced declining sales over the past three years due to sluggish performance in its key markets, North America and Europe. The board of directors has determined that strategic investment is necessary for future growth and has decided to secure operating funds through a rights offering to existing shareholders.

According to the Financial Supervisory Service on August 26, LK Samyang will issue 19.72 million new shares to raise 24 billion won. Shareholders will be allocated 0.389 new shares for each existing share. The expected issue price for the new shares is 1,217 won. The final public offering price will be determined on November 5. The total amount raised may change depending on the final price.

The funds raised will be used for research and development (R&D) to strengthen the competitiveness of next-generation optical products and autofocus (AF) lens technology, investment in molds to improve production efficiency, and to enhance production capacity in key processes such as lens, metal processing, and electronic components. A portion of the funds will also be used for debt repayment to improve the financial structure and reduce financial costs.

LK Samyang's sales have continued to decline, from 54.9 billion won in 2022 to 39 billion won in 2023, and 32 billion won in 2024. The cumulative sales for the first half of this year were 11.6 billion won, down 32.3% compared to the same period last year. Recently, the camera lens market has shifted from manual focus (MF) lenses, which are mainly used by professionals, to autofocus (AF) lenses. As sales of LK Samyang's main product, MF lenses, have decreased, overall sales have also fallen. In addition to declining sales, the cost of goods sold has increased, causing cash and cash equivalents to drop from 11.8 billion won in 2022 to 400 million won in the first half of this year.

LK Samyang explained that the sluggish sales were due to a combination of deteriorating external economic conditions and risks in the distribution structure. In the North American market, protectionist and tariff policies, along with high interest rates and rising prices, have dampened consumer sentiment. Economic recession in Europe, tightening monetary policy, and a weaker euro have also had an impact.

LK Samyang is attempting to turn things around by launching new businesses. The company is pursuing business diversification based on its high-precision lens processing technology. In June, it successfully launched a next-generation artificial intelligence (AI) star tracker for deep space navigation, co-developed with Telepix, aboard SpaceX's Falcon 9 rocket as part of the "Transporter-14" rideshare mission. The device has entered orbit and is undergoing step-by-step testing. The company is also expanding its lineup of high-resolution aerial photography lenses and industrial machine vision lenses.

Given the clear need to raise funds, LK Samyang has also signed a balance underwriting agreement with Daishin Securities, the lead underwriter. If there are any unsubscribed shares after the rights offering and public offering, Daishin Securities will purchase them. However, if the volume of unsubscribed shares is large, the resulting underwriting fees could disrupt the fundraising plan.

LK, the largest shareholder of LK Samyang, currently holds a 67.74% stake. The company plans to participate in the subscription at about 40% of its allocation. After the rights offering, the largest shareholder's stake is expected to decrease to around 56.37%.

A company representative explained, "By improving our financial structure through capital inflow, securing competitiveness in the interchangeable lens market, and expanding into new businesses to diversify our business portfolio, we aim to enhance corporate value and achieve sustainable growth."

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