Private equity fund manager Hahn & Company (Hahn & Co.) has formally pledged not to pursue a voluntary delisting of SK D&D for at least one year. The concession came as minority shareholder opposition intensified and South Korea’s financial authorities intervened during the company’s 136.7 billion won (approximately $96.7 million) rights offering process, prompting the firm to take swift self-corrective measures to restore market confidence.
According to investment banking industry sources on the 11th, SK D&D submitted a corrected securities registration statement to the Financial Supervisory Service (FSS) the previous day. The core of the amended filing explicitly stipulates that Hahn & Co. has no intention of pursuing a delisting through a tender offer or other means for at least one year from the date of submission. This replaces the vague language in the original filing submitted on the 28th of last month, which only stated that a delisting would not be pursued “for the time being,” now locking in a specific timeframe.
Hahn & Co. not only disavowed any intention to pursue delisting but also blocked any indirect attempts to increase its equity stake. Through the corrected filing, SK D&D stated, “Hahn & Co. has confirmed it has no intention of acquiring additional shares through on-market transactions or block deals for the purpose of artificially increasing its stake.” Furthermore, the company explicitly stated it has “no plans for share buybacks or cancellations that could reduce the stake held by ordinary shareholders.” This effectively seals off all pathways for increasing the ownership ratio through tender offers, open-market purchases, or treasury share cancellations.
The rights offering is an unavoidable measure to resolve SK D&D’s liquidity crisis. The company plans to use the 136.7 billion won raised by issuing 44.681 million new shares to repay 62 billion won (approximately $43.9 million) in privately placed bonds maturing in October and to fulfill joint guarantee obligations—approximately 74.7 billion won—on bridge loans for buyers at the Gunpo Triatz Knowledge Industry Center. SK D&D explained that while it is pursuing self-rescue measures including project-based asset-backed loans, share-backed loans, and asset sales, its cash balance could turn negative by October without the rights offering.
Collective action by minority shareholders proved to be the decisive catalyst for the correction. Shareholders focused on the fact that if unsubscribed shares arise during the offering, the stake of the largest shareholder, Hahn & Co., could actually increase. Given Hahn & Co.’s previous attempt at a voluntary delisting through a tender offer at roughly a 50% premium to the market price, suspicions arose that this capital raise was also a prelude to increasing its ownership.
Shareholders organized through the minority shareholder platform ‘ACT’ submitted a petition to the FSS on the 5th, stating they were “raising reasonable suspicions regarding Hahn & Co.’s renewed pursuit of a delisting.” The FSS responded swiftly the same day, demanding that SK D&D correct its securities registration statement.
The controversy surrounding the treatment of unsubscribed shares was also addressed. Initially, SK D&D decided not to offer forfeited shares through a public offering but to leave them unissued, drawing criticism that this indicated an intent to increase the controlling stake. In response, the company presented calculations in the corrected filing showing that regardless of the assumed subscription rate by existing shareholders, the minority shareholder stake would remain higher under the non-issuance method compared to a public offering. The logic is that switching to a public offering would increase the total number of issued shares, with those shares allocated to new investors, resulting in greater dilution for existing shareholders.
This incident illustrates a growing trend this year of rights offering plans being disrupted by financial authorities’ intervention. It is understood that more than 15 cases have seen their fundraising schedules delayed or sizes reduced due to FSS correction demands this year alone. Hanwha Solutions, after receiving two correction requests in April, slashed its planned capital increase from an initial 2.4 trillion won (approximately $1.7 billion) to 1.7 trillion won (approximately $1.2 billion). EcoPro BM’s rights offering registration filed in June has also seen its payment schedule delayed due to FSS demands.
Hahn & Co.’s decision comes as SK D&D faced difficulties refinancing existing debt after the credit market froze following the Jungheung Group/JR Global REIT debacle. Hahn & Co. Development Holdings, a special purpose company established by Hahn & Co., sought to provide liquidity through the rights offering, but with the fundraising path blocked by minority shareholder opposition and regulatory intervention, the firm appears to have taken a conciliatory stance.
An investment banking industry source commented, “It appears Hahn & Co. is trying to dispel market misunderstandings to facilitate SK D&D’s swift normalization.”