Newbotech Successfully Improves Financial Structure Through Free Capital Reduction and Paid-in Capital Increase

Newbotec, a KOSDAQ-listed company, has successfully improved its financial structure through a reverse stock split and a rights offering.

On May 14, Newbotec decided to execute a reverse stock split by consolidating 5 common shares into 1 share of the same par value. This reduced the capital stock, but the capital reduction surplus generated was used to offset accumulated deficits, thereby improving the financial structure and laying the groundwork for shareholder returns.

Following the reverse stock split, Newbotec conducted a rights offering with a size of approximately KRW 6.9 billion through a shareholder allocation followed by a general public offering of unsubscribed shares. The funds raised from the rights offering will be used to repay borrowings and for operating capital.

Through the reverse stock split and rights offering, Newbotec’s financial structure has significantly improved. Before the reverse stock split, Newbotec’s capital stock was approximately KRW 20.7 billion, and accumulated deficits were about KRW 29.4 billion. After the reverse stock split, capital stock decreased to about KRW 4.1 billion, and the capital reduction surplus fully offset the accumulated deficits.

After the rights offering, the debt ratio dropped from about 245% as of the end of last year to around 140%, and it is expected to fall below 100% once debt repayments are made. This improvement is expected to enable a full-scale rebound through enhanced performance.

In fact, as of the second quarter, Newbotec’s sales decreased by 13% compared to the same period last year, but operating profit and net income increased by 52% and 403%, respectively. Net income rose by 206% year-over-year in the first quarter and surged 403% in the second quarter.

This is largely attributed to the main business of PVC pipes, where the decline in raw material prices since 2022 and the increase in selling prices had a significant impact. The eco-friendly deicing agent also recorded favorable results due to increased sales after being registered as an excellent product by the Public Procurement Service and the decline in raw material prices. Looking at the trend in cost of sales ratio, it was 71.3% in Q2 2023 but decreased to 64.2% in Q2 2024.

Meanwhile, in the preemptive subscription by existing shareholders held from the 4th to the 5th, 3,921,657 shares were subscribed out of 5.2 million shares offered, recording a subscription rate of 86.09%. Subsequently, 723,255 unsubscribed shares were offered to the general public from the 9th to the 10th, with 8,577,510 shares subscribed, achieving a subscription rate of 1186%.

A Newbotec representative stated, “Through this reverse stock split and rights offering, we have improved our financial structure and plan to continue stable management based on this. We will also strive for continuous growth going forward.”