Record Low Price in Large-Scale Rights Offering
Major Shareholder Plans to Participate in Only 30% of Allocated Shares
Company States "Still a Plan, Subject to Change"
[Asia Economy Reporter Jang Hyowon] Bitsrosys, a company listed on the KOSDAQ, is conducting a large-scale rights offering that issues new shares equal to the existing shares. As a result, the stock price hit the lower limit. Ultimately, this means turning to ordinary shareholders for support, but controversy is expected as the largest shareholder plans to subscribe to only 30% of the allocated shares.
According to the Financial Supervisory Service's electronic disclosure on the 5th, Bitsrosys announced a rights offering worth 17.7 billion KRW. This rights offering allocates 0.9537857804 new shares for every existing share. The planned issuance of new shares is 24 million, which corresponds to 95.4% of the total shares before the capital increase, representing a large-scale issuance.
This will theoretically dilute the value of existing shareholders' stocks by about half. In fact, Bitsrosys's closing price on the 3rd, when the rights offering was announced, was 1,265 KRW, but the planned issuance price for the new shares was announced as 739 KRW.
Accordingly, Bitsrosys's stock price plunged. On the 4th, the stock price hit the lower limit and fell to 890 KRW. Individual shareholders who were unaware of the capital increase plan were hit hard by the large volume of sell orders and suffered the full brunt of the lower limit price.
Lee Gijae, CEO of Bitsrosys, stated, "This is to raise the necessary funds not only to enhance the competitiveness of existing businesses but also to expand business areas." The capital raised will be used for overseas infrastructure construction projects and research and development expenses.
Bitsrosys is a company specializing in automatic control systems. It mainly develops, supplies, and builds systems such as remote centralized monitoring and control systems, distributed control systems, and platform safety doors used in large-scale power plants and railroads.
Bitsrosys entered rehabilitation procedures in 2019 due to loan defaults, unpaid debts, and lack of operating funds. At that time, Woosujeonggi, led by CEO Lee Gijae, invested 7 billion KRW to acquire Bitsrosys, restructured its financial status through capital reduction and rights offerings, and then raised an additional 4.6 billion KRW to become the largest shareholder.
Currently, the largest shareholder of Bitsrosys is VH1, a special purpose company (SPC) of Woosujeonggi, holding 7 million shares (27.82%). Woosujeonggi also separately holds 2,393,608 shares (9.51%), making the total shareholding about 37%.
However, this time Woosujeonggi plans to subscribe to only about 30% of the allocated shares in the capital increase. While turning to existing shareholders for support, the largest shareholder is not participating fully in the allocated shares. If the subscription is at the 30% level, VH1's shareholding will decrease by 9.51 percentage points from the current level to 18.31%. Regarding this, a Bitsrosys official said, "The largest shareholder subscribing to 30% is just a plan for now," adding, "It may change depending on the situation."
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