[Edaily Reporter Park Jung-Soo ] The 3 billion won rights offering by POONGWON PRECISION Co.,Ltd.(371950)achieved a dismal subscription rate of 4.85%. As a result, the lead underwriter, SANGSANGININVESTMENT&SECURITIES(001290), was left to absorb approximately 95% of the offering, and the high forfeit fees have further increased the issuer’s burden, sparking controversy over SANGSANGINVESTMENT&SECURITIES’ decision to act as lead underwriter.

According to the Financial Supervisory Service’s electronic disclosure system on the 24th, POONGWON PRECISION Co.,Ltd. announced in a small-scale public offering results report that SANGSANGINVESTMENT&SECURITIES, the lead underwriter, had purchased all 747,240 shares that went unsubscribed in the public offering. The purchase amount totaled 2.85445 billion won, accounting for 95.15% of the total offering.
In the public offering conducted by POONGWON PRECISION Co.,Ltd. on the 19th and 20th, out of the 785,340 shares scheduled for issuance, subscriptions from retail investors totaled only 38,100 shares. The subscription rate was 4.85%, and SANGSANGINVESTMENT&SECURITIES underwrote the remaining 95.15%.
POONGWON PRECISION Co.,Ltd. had previously held a board meeting on the 14th and decided to conduct a public offering to raise approximately 3 billion won. Of this amount, 2 billion won is earmarked for debt repayment, while the remaining approximately 1 billion won will be used as working capital. The actual amount raised was finalized at 2.9999 billion won.
The point of contention was the issue price. The issue price for the new shares was set at 3,820 won, determined by applying a 30% discount to the reference share price. In accordance with relevant regulations, the weighted arithmetic average share price from the third to the fifth trading day prior to the subscription date was used as the reference share price, to which a 30% discount was applied.
From the investors’ perspective, concerns grew that the new shares might be released at a price significantly lower than the existing stock price. In fact, on the 18th—the first trading day following the decision to conduct the rights offering—POUNGWON PRECISION Co.,Ltd. closed at 4,120 won, down 29.93% from the previous trading day, hitting the daily price limit. In just one day, its market capitalization evaporated by approximately 40 billion won.
Subsequently, during the public offering subscription held on the 19th and 20th, the subscription rate remained at just 4.85%, indicating a lack of interest from investors. After the subscription period ended, the stock price even fell below the new share issuance price. The stock price, which stood at 3,915 won on the 20th—the final day of the subscription period—dropped to 3,480 won the following day, falling below the new share issuance price, and continued to decline to 3,335 won on that day.
Ultimately, as the market price fell below the new share issuance price, even investors who participated in the subscription entered a loss zone. In particular, given the fee structure, as the volume of unsubscribed shares increases, the forfeit fees that POONGWON PRECISION Co.,Ltd. must bear also rise.
SANGSANGINVESTMENT&SECURITIES is contracted to receive 2.5% of the total issuance amount as an underwriting fee and, separately, 25% of the remaining underwritten amount as a non-subscription fee. Combined, these two fees total approximately 800 million won, which exceeds one-quarter of the total funds raised.
An ECM executive at a securities firm stated, “While a 25% unsubscribed share fee is not unprecedented in the market, there have been quite a few recent capital increases where fees are applied on a sliding scale—ranging from the high teens to the 20s—depending on the scale of unsubscribed shares.” He added, “Considering POONGWON PRECISION Co.,Ltd.’s financial situation, its funding options appear to be limited, so it likely had no choice but to opt for a capital increase.”
As of the end of June this year, POONGWON PRECISION Co.,Ltd.’s consolidated cash and cash equivalents amounted to only approximately 660 million won, while current liabilities reached 59.6 billion won. Its debt-to-equity ratio has also risen to 749%. Analysts note that the decision to allocate 2 billion won—two-thirds of the funds raised through this rights offering—toward debt repayment is closely tied to this financial situation.
Ultimately, although POONGWON PRECISION Co.,Ltd. applied a 30% discount, its stock price hit the daily lower limit immediately after the rights offering was announced, and more than 95% of the offered shares remained unsubscribed, increasing the issuer’s commission burden. Consequently, questions have been raised as to whether the lead underwriter’s judgment was appropriate, given a comprehensive consideration of the fundraising method, issuance terms, and market demand.
In response, a representative from SANGSANGINVESTMENT&SECURITIES explained, “The issue price was determined after comprehensively considering market conditions, the stability of the subscription, and various factors associated with the firm commitment,” adding, “As for the unsubscribed shares fee, there are cases where other companies apply rates of 20–25%, so it is not significantly higher than the industry average.”
Regarding the rationale for participating in POONGWON PRECISION Co.,Ltd.’s rights offering, the spokesperson said, “POONGWON PRECISION Co.,Ltd. is a company that has been developing technology related to fine metal masks (FMM), a core component of OLEDs, and promoting their domestic production,” and added, “We made this decision after comprehensively reviewing the company’s technological capabilities and the status of its business initiatives.”