Korea’s Doosan Heavy Industries and Construction Co. (DHIC) is out to raise up to 850 billion won ($755 million) in fresh capital – over 500 billion won through issues in new shares and 350 billion won through asset sales – to rescue its cash-strapped construction unit and improve cash balance to seek out new growth.

DHIC in a regulatory filing on Thursday said it will issue 85,000,000 new common shares at 6,390 won apiece in hopes to raise 543.15 billion won. To issues will first be assigned to existing shareholders and later up for public offering by underwriters Korea Investment & Securities Co. and NH Investment & Securities Co.

The company said it will use the proceeds to pay off debt and invest in new growth projects. But the bulk goes into Doosan Engineering & Construction to keep it afloat.

The news of sharp increase in outstanding issues sent DHIC shares nearly 9 percent lower to end Friday at 8,350 won. Doosan E&C shares lost 3 percent and closed the day at 1,470 won.

DHIC owning a 75.8 percent of Doosan E&C will shell out 300 billion won to purchase the construction company’s new shares. Doosan E&C disclosed on the same day to issue 420 billion won in new common shares (334,661,354 shares at 1,255 won each) to its existing shareholders.

Doosan E&C will pay off its maturing debt to lower liabilities to 650 billion won and ratio against assets to around 230 percent. Its heavy debt had been burdening the company against poor business performance. The builder reported an operating loss of 52.2 billion won in 2018. Its net loss ballooned to 551.8 billion from 184 billion won a year ago.

By Chun Gyung-woon and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]