Financial Supervisory Service. Yonhap News
The Financial Supervisory Service (FSS), which has twice halted Hanwha Solutions’ (009830.KS) rights offering, said it will continue to request amendments if the information provided to investors in the securities registration statement is deemed insufficient. In an unusual move, the FSS disclosed its key review points, pressuring Hanwha Solutions to supplement its filing.
Hwang Sun-oh, Deputy Governor of the FSS Capital Markets and Accounting Division, held a briefing on Wednesday and said, “When we determine that information necessary for investment decisions is not properly stated in the registration statement, we have no choice but to continue requesting amendments.” He added, “The legal objective of the registration statement is to ensure that sufficient information for investors’ decisions is fully disclosed.”
This is not the first time a Hanwha Group affiliate has received a warning of “unlimited amendment requests” for its registration statement. In April last year, during the review of Hanwha Aerospace’s (012450.KS) rights offering, former FSS Governor Lee Bok-hyun said, “If there are deficiencies, we will request amendments to the securities registration statement regardless of how many times it takes.” Hanwha Aerospace received two amendment requests from the FSS and raised capital on a somewhat delayed schedule compared to its initial plan.
The FSS outlined three key points regarding its review of Hanwha Solutions’ rights offering. “The previous filing was insufficient in terms of what specific liquidity risks the company faces, whether there really is no other means of raising funds besides the rights offering, and what specific grounds support the outlook that earnings will improve from current levels,” Hwang said.
Typically, the FSS does not disclose the focal points of its registration statement reviews. This is to prevent unconfirmed content from affecting the market. This time, the FSS effectively provided guidelines to Hanwha Solutions by considering both investor protection and the company’s difficulties in raising capital, observers said.
Hanwha Solutions submitted its initial registration statement for a 2.4 trillion won rights offering on March 26, and received its first amendment request from the FSS on April 9. Hanwha Solutions submitted a revised filing scaling down the rights offering to 1.8 trillion won on April 17, but the FSS requested another amendment on April 30.
The FSS also said it is reviewing various controversies surrounding Samcheondang Pharmaceutical (000250.KS) ahead of the release of disclosure improvement guidelines for pharmaceutical and biotech companies next month. “We are closely watching this stock (Samcheondang Pharmaceutical),” Hwang said. Lee Dong-gyu, Director of the FSS Disclosure Review Department, said, “As in the Samcheondang Pharmaceutical case, there are instances where the content of press releases voluntarily distributed by a company differs from statutory and exchange disclosures.” He added, “We plan to release disclosure guidelines at the end of June to align these as much as possible.”
For Mirae Asset Securities (006800.KS), which is pushing to allocate SpaceX IPO shares to domestic investors, a renewed order to refrain from marketing was issued following a verbal warning last month. “Mirae Asset Securities clearly seems to have the intention to sell SpaceX (IPO) shares domestically,” Hwang said, but pointed out, “Without having made a decision on how to sell them, there has been too much promotion in the media.”