Hanwha Aerospace has hit another regulatory snag with its planned rights offering, as South Korea’s financial watchdog raised concerns about a lack of transparency and the potential impact on shareholders.
The Financial Supervisory Service (FSS) said on Apr. 17 that it had requested further revisions to the securities registration statement Hanwha Aerospace submitted on Apr. 8.
The company had initially planned to raise 3.6 trillion won (about $2.53 billion) through the offering—its largest ever—but later reduced the amount to about $1.62 billion.
An FSS official said the revised filing did not provide enough explanation of what had changed and how it would affect the company and its shareholders. With the structure of the fundraising shifting to include third-party allocations, the agency noted that more clarity was needed on the implications of the new plan.
The regulator also pointed to insufficient explanation surrounding Hanwha Aerospace’s recent buying and selling of shares in affiliate Hanwha Ocean.
Although the company updated details about its internal decision-making process and how it plans to use the capital, the FSS said those descriptions were still lacking. The agency also stressed the need for better communication with general shareholders.
Investor backlash erupted in March when Hanwha Aerospace first announced the 3.6 trillion won rights offering, as fears of share dilution led to a steep drop in stock price.
Just five trading days later, the FSS made its first correction request, saying the company had failed to adequately justify the offering, explain how it would use the funds, or engage shareholders effectively.
In response, Hanwha Aerospace revised its plan. It cut the offering size to 2.3 trillion won and said that affiliates, including Hanwha Energy, would buy around $914 million worth of shares.
The company also set a 15% discount rate for general shareholders while giving no discount to affiliated parties—a structure seen as more favorable to the public.
FSS Gov. Lee Bok-hyun previously said the agency would continue to request revisions as many times as necessary if filings remain incomplete.
After the second correction was issued, Hanwha Aerospace’s stock rose 3.55% to 816,000 won on Apr. 17, reaching an all-time high.
The rights offering was originally expected to take effect on Apr. 23, but the timeline will likely be delayed. Hanwha Aerospace said it would carefully review the regulator’s concerns and respond in good faith.
