Issued 0.46 new shares per Kooju share to raise 28.5 billion KRW... Repaid 10.5 billion KRW in borrowings
Debt ratio at 110%, showing better financial structure compared to peers
Largest shareholder stake reduced from 74% to 22% since 2019 listing
[Asia Economy Reporter Hyungsoo Park] Maniker F&G, a meat processing product manufacturer, has raised funds 1 year and 6 months after its listing. Maniker F&G will use the funds raised from shareholders to replace and expand facilities. Some of the funds will be used to repay debt to improve the financial structure.
According to the Financial Supervisory Service on the 25th, Maniker F&G will conduct a rights offering by allocating 0.46 new shares per 1 existing share. The planned issue price of the new shares is 5,700 KRW, raising a total of 28.5 billion KRW. The final issue price will be confirmed on May 25. The scale of fund raising may change depending on stock price fluctuations.
Maniker F&G allocated 14.1 billion KRW of the raised funds to facility investment. Maniker F&G explained that due to a shortage of production facilities, operating night shifts causes productivity decline and excessive labor costs. They plan to purchase real estate for expansion, build new production facilities, construct refrigerated and frozen warehouses for inventory storage, and carry out wastewater treatment plant and auxiliary facility construction.
They will repay 6.4 billion KRW of short-term borrowings maturing this year and 4.1 billion KRW of long-term borrowings, totaling 10.5 billion KRW. The remaining 4 billion KRW will be used to purchase raw materials and develop new products.
Previously, Maniker F&G raised 10.3 billion KRW through an initial public offering (IPO) in August 2019. They used 6.4 billion KRW to repay borrowings, 1.2 billion KRW to purchase machinery and repair facilities, and the remaining 2.7 billion KRW as operating funds.
Maniker F&G’s stock price dropped about 20% after the capital increase decision. Existing shareholders left due to concerns about shareholder value dilution and additional fundraising after about a year.
There are also voices of dissatisfaction toward the largest shareholder, Farm Story. Farm Story held about 74.20% of Maniker F&G’s shares at the time of the 2019 IPO. The current holding ratio has decreased to 22.18%. The largest shareholder explained that they sold Maniker F&G shares to secure funds in preparation for uncertainties such as the African Swine Fever (ASF) disease risk last year, consumption contraction due to the spread of COVID-19, and financial market instability.
Farm Story sold about 3.69 million shares of Maniker F&G on the market between February and July last year, cashing out about 38 billion KRW. The average selling price per share was 10,295 KRW, more than 30% higher than the current stock price.
Farm Story acquired 100% of Maniker F&G’s shares for 25 billion KRW in November 2014. In April 2017, they participated in a rights offering and invested an additional 1 billion KRW. Maniker F&G later lowered the par value from 5,000 KRW to 500 KRW through a stock split. Ultimately, Farm Story, which invested 26 billion KRW, recovered all its investment in 6 years.
Maniker F&G’s debt ratio decreased annually from 202.4% in 2016, 152.5% in 2017, 124.7% in 2018, to 59.46% in 2019. Although the debt ratio rose to 110.29% last year, it remained lower than the industry average of 148.53%. As of the end of 2020, it holds 19.2 billion KRW in cash and cash equivalents. Last year, cash equivalents increased by issuing bonds to secure cash liquidity in preparation for COVID-19.
The largest shareholder expressed a positive outlook on Maniker F&G’s business prospects and stated that they plan to subscribe to 100% of the newly allocated shares.
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