Chairman Choi Jung-woo's 'Foresight'... POSCO Chemical's Secondary Battery Business Continues to Expand Rapidly

Subscription Rate 103%: Successful Paid-in Capital Increase of 1.3 Trillion Won

POSCO's Largest Capital Increase Since Establishment

Investor Funding Surpasses Target Amount

Aiming for 20% Global Market Share by 2030

Targeting Annual Sales of 23 Trillion KRW

[Asia Economy Reporter Park Soyeon] POSCO Chemical, a secondary battery materials affiliate of POSCO Group, has successfully raised 1.3 trillion KRW through a rights offering, laying the investment foundation for future businesses. This is seen as a result of the proactive investment strategy initiated by POSCO Chairman Choi Jeong-woo.

POSCO Chemical plans to achieve a 20% global market share and annual sales of 23 trillion KRW in the secondary battery materials business by 2030. This is significant as it establishes a foothold for Korean companies to become world-class leaders not only in secondary battery cell manufacturing but also in the materials business.

◆ Largest Rights Offering in POSCO Group History = On the 15th, POSCO Chemical announced that it secured 1.2735 trillion KRW through a rights offering. Subscription for the rights offering was conducted over two days, January 13-14, targeting the employee stock ownership association and existing shareholders, achieving a subscription rate of 103%. The issue price was 77,300 KRW per share, with 16,475,000 shares to be issued. The payment date is January 21, and the new shares are scheduled to be listed on February 3.

The employee stock ownership association, allocated 11.8% of the total new shares, subscribed to 1,919,027 shares, which is 99% of their 1,944,050 shares allocation, amounting to 148.3 billion KRW. Existing shareholders subscribed to a total of 15,055,755 shares, including the allocated 14,401,126 shares and an additional 654,629 shares through oversubscription. POSCO, the largest shareholder with a 61.3% stake, will invest 688.1 billion KRW for 8,901,382 shares.

Through this rights offering, POSCO Chemical has secured investment funds that significantly exceed its target. Due to the rise in stock price, the subscription rate was high, and the initially targeted 1 trillion KRW was increased to 1.2735 trillion KRW. When the rights offering was announced on November 6 last year, the expected issue price per share was 60,700 KRW, but on January 8, just before the subscription period, the issue price was finalized at 77,300 KRW, reflecting the weighted arithmetic average stock price over the 3 to 5 trading days prior, resulting in a 16,600 KRW increase.

A POSCO Chemical official explained, "POSCO Group's largest rights offering since its establishment, presenting a vision to grow secondary battery materials into a core business and a global top-tier player, appears to have been highly evaluated by investors."

◆ Actively Responding to Global Demand... Expanding Production Capacity = POSCO Chemical plans to invest the funds raised from this rights offering in expanding mass production capacity for cathode and anode materials to actively respond to the rapidly increasing global demand.

Specifically, 690 billion KRW will be invested in facility expansion such as the cathode plant in Gwangyang, and 150 billion KRW will be used to build a cathode production plant in Europe, where electric vehicle demand is surging. Through these new and expanded facilities, POSCO Chemical aims to increase cathode production capacity from the current 40,000 tons to 400,000 tons and anode capacity from 44,000 tons to 260,000 tons by 2030.

With the increase in estimated reserves at POSCO's lithium salt lake in Argentina, the announcement of group-level raw material value chain investment plans including nickel and graphite, and POSCO Chemical's expansion of cathode supply to Ultium Cells (LG-GM battery joint venture) in the U.S., the company's competitive advantages and business performance are becoming more pronounced, raising expectations for long-term growth.

Following the successful large-scale capital increase, POSCO Chemical has also secured a stable financial structure. The debt ratio, which was 104% as of the end of Q3 2020 on a consolidated basis, will decrease to 46% after the capital increase.