Hanul & Jeju Strengthens Financial Base with Capital Increase... Pursues 5-to-1 Reverse Stock Split and Accumulated Deficit Coverage

Hanul & Jeju is moving to improve its financial structure by pursuing a reverse stock split and covering accumulated deficits, following a capital increase of approximately 19.7 billion won this year. The company plans to streamline its share trading structure and reduce accumulated deficits to protect shareholders and lay the groundwork for medium- to long-term shareholder returns.

Hanul & Jeju said on the 13th that it had increased its capital by approximately 19.7 billion won this year through a paid-in capital increase, the conversion of convertible bonds (CBs) into shares, and the exercise of warrants attached to bonds with warrants (BWs). This consisted of approximately 9.9 billion won from the paid-in capital increase, approximately 3.6 billion won from CB conversions, and approximately 6.2 billion won from the exercise of BW warrants.

The company said the paid-in capital increase expanded its capital base, while converting liabilities related to CBs and BWs into equity improved its financial stability.

The company plans to put amendments to its articles of incorporation related to a reverse stock split and a proposal to cover first-half deficits to an extraordinary general meeting of shareholders on November 27. The reverse stock split will combine five common shares with a par value of 100 won each into one common share with a par value of 500 won, at a ratio of 5 to 1.

The company plans to use the reverse stock split to streamline the number of shares in circulation and the share price structure, proactively addressing market concerns about its share price. The aim is to build market confidence by reducing uncertainty in the share trading structure while also working to restore profitability and improve financial soundness.

The company also plans to cover approximately 5.3 billion won in losses incurred in the first half. To clear these losses, which were reviewed by an external auditor, it will put a proposal to reduce additional paid-in capital under capital reserves and transfer the same amount to retained earnings to the extraordinary general meeting of shareholders.

Once this coverage is completed, the total amount of accumulated deficits covered this year using capital reserves will reach approximately 89.7 billion won, including approximately 84.4 billion won covered following a resolution at an extraordinary general meeting of shareholders in July.

Covering accumulated deficits does not increase total equity itself, but reclassifying capital accounts reduces the deficit balance. The company plans to reorganize its financial structure by increasing capital and clearing accumulated deficits, thereby creating conditions to consider medium- to long-term shareholder return policies as profits accumulate in the future.

A company representative said, "This year, we have strengthened our capital base and worked to improve our financial structure through a paid-in capital increase, the conversion of convertible bonds into shares, and the exercise of warrants. The reverse stock split and the coverage of accumulated deficits are also part of our efforts to reduce the uncertainty that concerns shareholders and enhance the company's financial stability."

The representative added, "We will complement our efforts to increase capital and clear accumulated deficits with efforts to restore operating performance, turning them into greater shareholder value. Going forward, we will comprehensively consider our business performance, financial position, distributable profits, and other legal requirements as we review shareholder return measures, and will repay shareholders' trust with concrete action."

This content was produced with the assistance of AI translation services.