Plan to Raise 120 Billion KRW Through Rights Offering
Annual Production Capacity of 35,000 Tons After Expansion Completion
Eco & Dream, whose sales surged in the first quarter of this year, is rushing to expand its facilities. Although the existing Cheongju plant operates 24 hours a day, it cannot keep up with precursor orders. Eco & Dream plans to issue new shares to raise large-scale funds and significantly expand its production capacity.
According to the Financial Supervisory Service's electronic disclosure system on the 17th, Eco & Dream will issue 3.4 million new shares by allocating 0.30 new shares per existing share. The planned issue price is 35,250 KRW per share, raising a total of 120 billion KRW.
Kim Min-yong, the largest shareholder and CEO, holds a 17.8% stake. He will acquire about 20% of the allocated new shares. After the paid-in capital increase, his shareholding ratio is expected to fall by 3.25 percentage points to 14.56%.
Eco & Dream produces cathode active material precursors for secondary batteries. Precursor materials are basic substances synthesized with new chemical compositions of nickel, cobalt, manganese, etc., used to manufacture cathode active materials. The company is developing high-output, high-capacity, and highly stable cathode active material precursors for electric vehicles with major customers.
Eco & Dream recorded consolidated sales of 19 billion KRW in the first quarter of this year, a 98% increase compared to 9.6 billion KRW in the same period last year. This was driven by a significant increase in precursor sales. Precursor sales were only 3.2 billion KRW last year but reached 10.7 billion KRW in the first quarter of this year.
Earlier, on the 29th of last month, Eco & Dream received precursor orders worth 8.3 billion KRW. The contract period is until the 14th of next month. The company explained that this is close to the monthly maximum production capacity of the Cheongju plant, approximately 400 tons. Through efforts to increase production at the Cheongju plant over about three months, it began operating 24 hours a day. With production volume expected to increase significantly from the second quarter of this year, sales growth is anticipated to accelerate.
Considering the global precursor supply forecast and the electric vehicle production plans of its downstream customers, Eco & Dream decided on a large-scale expansion investment. It will invest 220 billion KRW by March next year to expand precursor production capacity.
In October last year, to expand cathode active material precursor production facilities, the company acquired land of about 45,000 pyeong (approximately 148,760 square meters) in the Saemangeum Industrial Complex, Gunsan City, Jeollabuk-do, for about 22.5 billion KRW. About 80 billion KRW of the funds raised through the capital increase will be used for facility investment, and the company is considering borrowing from financial institutions to cover the shortfall. After the expansion, production capacity will increase from the current annual approximately 5,000 tons to about 35,000 tons. Early this year, Eco & Dream signed a long-term supply contract for high-nickel precursors for electric vehicles with a customer and plans to supply precursors produced in Saemangeum.
The related industry expects a shortage of precursor supply in Korea starting from 2025. Although Chinese companies have had a high market share in the secondary battery precursor material sector, domestic orders are increasing alongside efforts to raise the self-sufficiency rate of materials.
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