Winpack, Capital Increase of 70% Market Cap... Underwriters' Share if Undersubscribed

Expectations for Semiconductor Market Improvement Drive Large-Scale Investment Plans
Responding to Early Redemption Requests for CB and BW Due to Stock Price Decline

Winpack, an outsourced semiconductor package and test company (OSAT), has launched a large-scale fundraising effort. The funds raised will be used as facility capital to respond to increasing demand as the number of customers diversifies. However, concerns about shareholder value dilution are emerging, as the company plans to issue new shares to existing shareholders to raise funds equivalent to 70% of its market capitalization.

According to the Financial Supervisory Service's electronic disclosure system on the 11th, Winpack will issue 0.92 new shares per existing share to raise 55 billion KRW. As of the closing price on the 8th, Winpack's market capitalization was 75 billion KRW. The planned issue price for the new shares is 1,003 KRW, and the final issue price will be confirmed on May 29.

Winpack is a company responsible for outsourced production of packaging and testing processes in semiconductor manufacturing. It has maintained a business relationship with SK Hynix for over 10 years and has been receiving orders from Samsung Electronics since 2021.

Unlike existing domestic semiconductor post-processing companies that operate separately in packaging or testing businesses, Winpack has built infrastructure capable of receiving integrated post-processing orders. It has secured various packaging technologies, including those aimed at increasing integration density centered on memory semiconductors. The company also applies its packaging know-how to testing. Last year, it recorded sales of 86.2 billion KRW and an operating loss of 22.9 billion KRW. Due to the semiconductor industry downturn, sales decreased by 43.5% compared to the previous year, and operating profit turned negative.

Of the funds raised through the rights offering, 27.5 billion KRW will be used for investment in semiconductor packaging and testing facilities. Due to the technology-intensive nature of semiconductor packaging and testing processes, maintenance activities to maintain and improve quality above a certain level are essential. If quality issues such as yield decline and increased defect rates occur, regaining trust becomes difficult.

During the steady process of facility investment, the company raised funds by issuing convertible bonds (CB) and bonds with warrants (BW). Since the conversion and exercise prices are higher than the current stock price, investors are likely to demand early redemption. This is why 22 billion KRW of the funds raised through the rights offering is allocated for debt repayment.

As the artificial intelligence (AI) market grows, demand for memory semiconductors is increasing. Expecting an improvement in the industry, the decision to raise funds for facility investment and financial structure improvement can be seen as inevitable. However, concerns about side effects from raising large-scale funds are also significant.

The newly issued shares amount to 54.88 million shares, exceeding 90% of the total issued shares of 59.58 million. Winpack's largest shareholder, Above Semiconductor, will participate in more than 50% of the rights offering shares allocated to it. After completing the rights offering, the largest shareholder's stake is expected to decrease from 38.31% to 29.13%, a drop of 9.18 percentage points.

If there are forfeited shares after the rights offering, a general public offering will be conducted. If there are still remaining shares afterward, Korea Investment & Securities, the underwriter of the paid-in capital increase, will subscribe to the new shares. The underwriting fee is 13.0%. If the planned funds are not raised through existing shareholder subscriptions and the general public offering, the fundraising plan may face difficulties.