Samsung Biologics (207940.KS), which is pursuing a 3 trillion won rights offering, cleared the financial regulator's review of its securities registration statement without a single request for correction. Analysts said the company made a persuasive case for choosing a share sale over borrowing to fund a large acquisition.
The registration statement Samsung Biologics filed on Aug. 28 took effect, according to the electronic disclosure system DART on the 13th. The company voluntarily filed a revised statement on the 11th supplementing details such as investment risk factors, but the changes were not substantial enough to reset the effective date. Samsung Biologics is the first company to clear the Financial Supervisory Service review without a change to its effective date among firms conducting trillion-won-scale rights offerings since the FSS introduced its focused review system for share sales last year.
With the FSS review completed smoothly, Samsung Biologics can now proceed with the offering, including setting the first-round issue price scheduled for the 30th of this month. The company plans to raise 3.0000009 trillion won based on a planned issue price of 1.322 million won per share. Given that the stock closed at 1.415 million won on the 11th, however, the final issue price — which applies a 15% discount to the reference share price — could come in lower.
The FSS is understood to have closely examined the rationale for the share sale during its review. Samsung Biologics plans to use the proceeds to fund its acquisition of PolyPeptide Group for 1.46 billion Swiss francs (2.4 trillion won). With an "AA" credit rating and a debt-to-equity ratio of 51.3% at the end of the first half, the company had to give a reasonable explanation for why it had not considered borrowing, such as issuing corporate bonds.
Samsung Biologics addressed that point in the revised statement filed on the 11th. "If we borrowed 3 trillion won and then took on an additional 1 trillion won in debt to cover funding needs such as a shortfall in investment resources, our debt-to-equity ratio would rise to 99.2%, and to 111.1% with an additional 2 trillion won," the company said. "That exceeds the threshold at which credit rating agencies consider a downgrade, which is a 90% debt-to-equity ratio." The company argued that its financial health could deteriorate without a large share sale, given its target of 15.4 trillion won in capital expenditure through 2034.
Samsung Biologics also ruled out issuing hybrid securities, which are classified as equity rather than debt for accounting purposes. Recent issues in the market have required paying a premium of 145 to 233 basis points over market rates, the company said. One basis point equals 0.01 percentage point.
Industry watchers also pointed to the low share of stock held by minority shareholders — 21.72% of total shares as of the end of the first half — as a reason the review went smoothly. At Hanwha Solutions (009830.KS) and EcoPro BM (247540.KQ), which each revised their registration statements several times, minority shareholders held more than half of the stock, at 58.03% and 54.7% respectively.
