Samsung Heavy to Raise 1.1 Trillion Won Via Rights Issue

The board of Samsung Heavy Industries Co., a major South Korean shipyard, approved a move to raise nearly 1.1 trillion won about (US$984 million) via a rights issue. 
The company will issue 159.12 million new shares in a public offering, with the price of new shares expected to be set at 6,920 won, according to company officials. 
The fresh fund will be used to pay off part of the company's maturing debts and keep the company running. 
The shipbuilder, along with its local peers, is undergoing government-initiated restructuring, while a sharp decline in new ship orders is creating serious problems for the already cash-strapped firm. 
An earlier assessment by a local accounting firm suggested Samsung Heavy may need up to 1.6 trillion won about (US$1.44 billion) to pay off its maturing debts and keep the company running. 
"Despite our self-rescue efforts, issuing new shares to raise operating funds for the company is unavoidable," Samsung Heavy CEO Park Dae-young told a shareholders' meeting held. 
"Though the possibility is extremely slim, now is the right time to raise additional funds as we need to prepare for a prolonged slump in new ship orders or delays in ship deliveries," he added. 
At the meeting, the company's shareholders agreed to revise the company's articles of association and increase the number of shares allowed to be issued to 500 million from the current 300 million. 
Out of some 159 million new shares to be issued, 20 percent will be offered to the company's employee stock ownership association, while another 24.08 percent are expected to be offered to affiliated companies in accordance with their existing stakes in the shipbuilder. 
As of end-June, Samsung Electronics Co. held a 17.62 percent stake in its shipmaking affiliate, while Samsung Life Insurance Co. held a 3.38 percent stake and Samsung Electro-Mechanics 2.39%. 
Others on the list of shareholders as of Oct. 4 will be offered a chance to purchase about 0.62 new share per each share they own. Offerings for existing shareholders will be held on Nov. 7-8. 
The remaining new shares will be offered to the general public on Nov. 10-11. 
The new shares will put total Samsung Heavy issues at about 390 million, according to South Korea's News Agency (Yonhap).