Daehan Fiber Optic Launches Fundraising Drive to Accelerate Growth

395 Billion Won Raised Through Rights Offering and General Public Subscription
Investments to Respond to AI Data Center Telecommunications Infrastructure
Laser Modules for Defense Industry Fostered as a New Growth Engine

Daehan Fiber Optic has launched a large-scale fundraising initiative to respond to the tariff policies of the Donald Trump administration in the United States. The company plans to use the capital raised through a rights offering to begin local optical fiber production in the U.S.

According to the Financial Supervisory Service's electronic disclosure system on December 9, Daehan Fiber Optic will issue 23.5 million new shares to raise 40.5 billion won. Shareholders will be allocated 0.178 new shares for every existing share they hold. The expected issue price per share is 1,722 won, with the final price to be determined on February 20 of next year.

As investments in artificial intelligence (AI) data centers in the United States increase, demand for telecommunications optical cables is also rising. Daehan Fiber Optic is planning facility investments to proactively address these changes in customer demand. In the third quarter of this year, the company's exports to the U.S. grew by 221% compared to the same period last year. Sales to its major client, a U.S. optical communications infrastructure company referred to as "M," saw a significant increase.

Daehan Fiber Optic is also in discussions to supply optical cable products to "M" next year, with the possibility of signing a supply contract by the end of this year. Separately, the company explained that it is also negotiating annual supply contracts with several backbone network operators in Texas, Carolina, and Florida.

To respond to the growing optical cable market, Daehan Fiber Optic is pursuing the acquisition of U.S. cable manufacturer INCAB AMERICA LLC. The company has received approval from the Foreign Investment Review Committee. Daehan Fiber Optic plans to quickly complete the acquisition process and enter the North American market, aiming to become a global telecommunications infrastructure supplier. Through its subsidiary TFO Networks, Daehan Fiber Optic can supply raw materials and semi-finished products to INCAB AMERICA. The company expects this to reduce costs and increase TFO Networks' sales.

A portion of the funds raised through the rights offering will be used to secure raw materials and working capital for telecommunications infrastructure, as well as to enhance performance verification and testing facilities for export products.

While its core business continues to grow, Daehan Fiber Optic is also investing in new business areas. This year, as part of a national project, the company developed laser optical fibers, a key component of laser weapon systems for defense. It is preparing for the mass production of laser modules for the "Block 1" laser anti-aircraft weapon system, the first of its kind in Korea. The company estimates that 2 billion won in facility funds and 1 billion won in initial operating capital will be required.

Heo Sunjae, a researcher at SK Securities, explained, "Daehan Fiber Optic is the only company in Korea working to localize the core optical fiber laser module for the 'Cheongwang' laser anti-aircraft weapon," adding, "the company has established vertical integration in this area."

Daehan Fiber Optic also expects the rights offering to improve its financial structure. The company's debt ratio on a consolidated basis rose from 138.87% in 2022 to 413.55% last year. Continued losses, accumulated deficits leading to capital reduction, and an increase in both short- and long-term borrowings were cited as reasons for the deterioration of its financial structure. Between the second and third quarters of this year, the conversion rights for the "10th convertible bond" were exercised, and as of the end of the third quarter, the debt ratio improved to 215.45%.

Following the announcement of the rights offering, Daehan Fiber Optic's share price fell by 14.8%. Concerns over shareholder value dilution due to the new share issuance led to the decline in share price.