Parent company greenlights Hanwha Aerospace's controversial $2.5 billion share sale

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Parent company greenlights Hanwha Aerospace's controversial $2.5 billion share sale

Published: 27 Mar. 2025, 16:50

JIN EUN-SOO
[email protected]

Audio report: written by reporters, read by AI

Hanwha Aerospace's shareholder meeting on March 25 [NEWS1]

Hanwha Corporation, the largest shareholder of Hanwha Aerospace, will fully participate in its subsidiary's 3.6 trillion won ($2.5 billion) share sale.

The holding company of Hanwha Group, which owns a 33.95 percent stake in the aerospace company, said it would acquire 1.6 million shares of the newly issued shares at 605,000 won each, paying out 980 billion won in total.

“We agree with Hanwha Aerospace's need for aggressive investment,” the company said in a release Wednesday. “In order to fully carry out responsibility as a major shareholder and elevate Hanwha Corporation's shareholder value through growth of its subsidiary, Hanwha is participating in this share increase.”

Hanwha Aerospace disclosed the plan to raise 3.6 trillion won in what would be Korea's largest share sale to date on March 20. The announcement drew intense scrutiny from retail shareholders for its potential to depreciate the value of existing shares.

Individual shareholders are not convinced that the share increase plan was necessary in order for the company to carry out its investment initiatives and become a global player in the defense realm. Some have speculated funds secured through the share issuance will support the succession plan of the three heirs — Kim Dong-kwan, Kim Dong-won and Kim Dong-sun — which Hanwha denies.

Hanwha Aerospace's top executives, as a result, including Hanwha Group Vice Chairman Kim Dong-kwan pledged to buy back treasury shares worth 4.8 billion won to relieve investor concerns.

“To overcome the growing bloc formation in Europe’s defense industry and mounting pressure from established global defense players, swift and large-scale local investment is desperate for us,” Hanwha Aerospace CEO Son Jae-il said at the shareholder meeting on Tuesday.

“A share increase is the most suitable option to carry out large investment in short period of time while also managing the debt ratio in order to win an overseas deal.”

Hanwha Aerospace shares nose-dived by nearly 20 percent over the three days following the announcement.

BY JIN EUN-SOO [[email protected]]