Conan Falls Short in National AI Project, Fundraising Plan Also in Jeopardy

Stock Plunges 31% After Rights Offering Decision
Failure to Secure "Independent AI Foundation Model Project"
Key Issue: Whether Second-Largest Shareholder SK Telecom Will Participate in Rights Offering

Conan Technology's large-scale fundraising plan has hit a snag after the company failed to be selected for the government-led "Independent Artificial Intelligence (AI) Foundation Model Project."

According to the financial investment industry on August 8, Conan Technology's stock price has fallen by 30.9% compared to July 16, when the board of directors convened. The stock, which had been trading above 39,000 won, plummeted to the 27,000 won range in just 16 trading days.

Previously, Conan Technology held a board meeting last month and resolved to conduct a rights offering for its shareholders. As a result of the rights offering plan, the stock price dropped by 13% on July 17. This was due to concerns over shareholder value dilution, as the company planned to issue 0.087 new shares for every existing share. Although the stock price rebounded to 36,000 won, it plunged again by 23% on August 4. The stock price fell below the expected new share issue price of 29,050 won, raising the possibility that the new share price could be set even lower. Of course, since there is still more than a month left before the final issue price is determined, a rebound in the stock price could allow the company to raise the originally planned amount. However, considering that a 25% discount is applied to the reference stock price when determining the new share price, it is difficult to deny that uncertainty surrounding the fundraising plan has increased.

The reasons behind the sharp stock price drop on August 4 suggest that it will not be easy for the stock to regain upward momentum. Conan Technology applied for the "Independent AI Foundation Model Development Project" organized by the Ministry of Science and ICT but ultimately failed to be selected. In addition to Conan Technology, Kakao, KT, and Motif Technologies also formed elite teams to compete, but they were unsuccessful as well. Five companies were selected: Naver Cloud, Upstage, SK Telecom, NC AI, and LG AI Research Institute.

SK Telecom, the second-largest shareholder of Conan Technology, formed a consortium with Krafton, Forty Two Dot, Rebellion, Riner, Select Star, Seoul National University Industry-Academic Cooperation Foundation, and Korea Advanced Institute of Science and Technology. A financial investment industry official said, "It appears that anxiety among shareholders has grown as Conan Technology participated in a separate consortium from SK Telecom and failed to be selected," adding, "Whether SK Telecom, which holds a 20.57% stake in Conan Technology, will participate in the rights offering will be an important indicator for general shareholders."