NuriPlan to Repay Debt with Large-Scale Paid-in Capital Increase at Around 80% of Market Cap

127 Billion KRW of the 16.8 Billion KRW Raised Through Paid-in Capital Increase Used for Loan Repayment
No Lock-up Restrictions, New Shares May Flood the Market at Listing

Nuriplan, a KOSDAQ-listed company, is conducting a large-scale rights offering by issuing approximately 85% new shares. As a result, Nuriplan's stock price plummeted. Most of the funds raised from the capital increase are planned to be used for debt repayment, raising concerns among shareholders.

According to the Financial Supervisory Service's electronic disclosure, Nuriplan announced after the market closed on the 8th that it decided to conduct a rights offering followed by a general public offering of forfeited shares worth 16.9 billion KRW. The expected issue price per share is 2,815 KRW, which is 36.7% lower than the closing price on the 8th.

The number of new shares allocated per existing share is 0.848, with a total of 6 million new shares planned to be issued. This is a large volume equivalent to 84.47% of the total issued shares before the capital increase, which stood at 7,102,743 shares. There is also a possibility that the new shares will flood the market all at once at the time of listing, as there is no lock-up period for the new shares. The new shares are scheduled to be listed on November 29.

Nuriplan plans to use 12.7 billion KRW of the funds raised from this capital increase for debt repayment. Specifically, the funds will be allocated as follows: 3 billion KRW for the 6th convertible bond put option claim, 3.2 billion KRW for the subsidiary Unison HKR's stock purchase claim, 4.1 billion KRW for the subsidiary Nurion’s loan repayment, and 2.4 billion KRW for financial institution loan repayment.

First, the 6th convertible bond was issued last June in the amount of 3 billion KRW to invest in the subsidiary Nuriyunison Holdings. Although conversion requests have been possible since June, the company expects that redemption will occur because the stock price has not exceeded the conversion price of 5,014 KRW. This convertible bond can be redeemed starting December 3.

Second, the convertible preferred shares of Unison HKR were issued in October 2021 in the amount of 6 billion KRW. Unison HKR is a major subsidiary accounting for 62% of Nuriplan’s total sales on a consolidated basis as of the end of the first half of this year. However, due to a high debt ratio and recorded losses, the company expects investors to request redemption.

Redemption can be requested starting April 28, 2024, at which time the principal plus approximately 7% annual compound interest must be repaid. Nuriplan and another subsidiary, Nurion, are responsible for providing these funds. Nurion plans to repay the 4.1 billion KRW it currently lent to Nuriplan and then use that amount for redemption. This is why Nuriplan is preparing a total of 7.3 billion KRW for this convertible preferred share redemption.

The remaining 2.4 billion KRW will be used by Nuriplan itself to repay loans borrowed from financial institutions. As of the first half of this year, Nuriplan recorded a debt ratio of 468.25%, significantly exceeding the industry average of 136.18%. Its current ratio was also 91%, below the industry average of 146%. Additionally, the company has provided land, buildings, and financial products it owns as collateral for the loans, raising the possibility of losing ownership of these collateral assets if loan repayments are not made.

Aside from debt repayment, 4.2 billion KRW of the capital increase funds will be used as operating capital. Nuriplan is a company engaged in construction work including metal structures, windows and doors, greenhouse construction, and steel structure construction. It is currently constructing and fabricating projects such as the Anseong?Seongnam construction, Gangdong-gu Resource Circulation Center construction, and Goseong-gun Haesanggil Skywalk. The capital increase funds will be used for purchasing materials and construction costs at these sites. Meanwhile, Nuriplan’s stock price plunged to the lower limit on the 11th, closing at 3,125 KRW.