Hanon Systems to raise 980 bn won via rights offering to shore up finances

(Hanon Systems)

Hanon Systems, an automotive thermal energy management solutions provider under the Hankook & Company Group, is moving to accelerate improvements to its financial structure through a large-scale rights offering. The company plans to raise 983.4 billion won ($669 million) to ease its debt burden while continuing investments in production facilities.

The company said Thursday that the final offering price for the rights issue, conducted through a shareholder allocation followed by a public offering of unsubscribed shares, has been set at 2,830 won per share.

The capital increase is primarily aimed at strengthening Hanon Systems’ balance sheet. Of the proceeds, 883.4 billion won will be used to repay borrowings. Once the repayment is completed as planned, the company’s consolidated debt ratio is expected to improve to around 164 percent, down from about 245.7 percent at the end of the third quarter this year.

The remaining funds will be allocated to operating capital, including 51.2 billion won for payments of accounts payable, and to capital expenditures such as expansion and maintenance of production facilities totaling 48.8 billion won.

The rights offering will issue 347.5 million new shares. Existing shareholders, based on holdings as of Nov. 14, will be entitled to subscribe to approximately 0.4 new shares for each share they own. Subscription for existing shareholders will take place from Dec. 19 to 22.

Hanon Systems’ largest shareholder, Hankook Tire & Technology, which holds a 54.77 percent stake, decided in September to subscribe to 100 percent of its allotted shares, amounting to 152.29 million shares, or 43.8 percent of the total new shares to be issued. The move reflects the controlling shareholder’s commitment to responsible management and long-term growth.

Hanon Systems has continued to invest in thermal management technologies and production capacity in line with the global shift toward eco-friendly vehicles. These investments, however, have increased financial pressure, prompting the need for structural improvement.

NH Investment & Securities is acting as the lead manager for the rights offering.

Lee Soo-il, vice chairman and chief executive officer of Hanon Systems, said the capital increase marks “an important turning point for advancing mid- to long-term growth strategies based on enhanced financial stability,” adding that the company will step up efforts to strengthen technological competitiveness and upgrade its business portfolio to improve profitability in a market increasingly centered on eco-friendly vehicles.