- Amends terms from May's capital increase, allocating new shares to Hankook Tire & Technology
- Funds to support proactive business restructuring and enhance financial stability amid industry changes
SEOUL, South Korea, Sept. 30, 2024 /PRNewswire/ -- Hanon Systems (KS:018880), a leading global provider of automotive thermal energy management solutions for electrified mobility, announced today that its board of directors has conditionally approved to expand the third-party allotment capital increase previously disclosed on May 3. Under the revised terms, Hanon Systems will issue approximately 145 million shares at a price of KRW 4,139 per share, raising a total of KRW 600 billion, fully funded by Hankook Tire & Technology. The initial capital increase of KRW 365.1 billion has expanded to a total of KRW 600 billion.
The capital increase is purposed to proactively secure operational funds for cost structure improvements while maintaining the company's competitiveness in the evolving automotive industry. A portion of the funds will be used for debt repayment, strengthening Hanon Systems' financial stability.
The amended terms of the capital increase are subject to consent of Hahn & Company Auto Holdings' acquisition financing lenders. Following this consent, Hahn & Company Auto Holdings and Hankook Tire & Technology will enter into a stock purchase agreement, with the capital increase funds to be deposited once the remaining international merger filings are completed. If the amended terms proceed as planned, the capital increase is expected to be completed by year-end.
Since the onset of the pandemic, the global automotive parts industry has been challenged by supply chain disruptions, inflation, and geopolitical conflicts. Additionally, with global automakers revising their electrification strategies, autoparts suppliers are also required to adjust their investment and production plans accordingly.
Despite these challenges, Hanon Systems has achieved growth through significant new business awards in the eco-friendly vehicle platforms of major automakers, supported by its technological leadership in thermal management solutions. Now, the company plans to complete business restructuring through this capital infusion to adapt proactively to the evolving industry environment and to position itself for future growth.
"As major automakers adjust their electrification strategies, it is crucial to build a flexible business structure that can respond to industry changes," said Nurdal Kücükkaya and Subu Nagasubramony, co-CEOs of Hanon Systems. "Hanon Systems is uniquely positioned with the technology and expertise to serve electric vehicles, hybrids, and internal combustion engines. By securing strong financial stability, we can further solidify our market leadership."
In recent years, Hanon Systems has proactively invested in production and R&D capabilities to prepare for vehicle electrification. Moving forward, the company plans to optimize and reallocate the invested resources in key regions, including Europe, North America, and China, to maximize investment efficiency. Operational funds will also be prioritized for cost structure improvements to reinforce the company's long-term profitability.
The capital increase will significantly bolster Hanon Systems' financial health. Kwang-Seob Jung, Executive Vice President and CFO, commented, "We anticipate that this capital increase will alleviate market concerns regarding our financial stability. Through enterprise-wide cost innovation and operational efficiency improvements, we are confident in expanding our cash flow generation, ultimately enhancing our long-term corporate value."
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About Hanon Systems
Hanon Systems is a leading provider of automotive thermal and energy management solutions for both electrified and conventional vehicles. The company's product lineup includes systems for heating, ventilation, and air conditioning; powertrain cooling; compressors; fluid transport; electronics; and fluid pressure solutions. Hanon Systems operates 50 manufacturing sites and three regional innovation centers, employing over 20,000 people across 21 countries. For more information, visit hanonsystems.com.
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