Doosan Infracore Co. will become Hyundai Doosan Infracore as it joins Hyundai Heavy Industries Group and clean up its capital structure by retiring shares in a ratio of 5-to-1 to start fresh.
The Korean construction equipment maker on Friday held an extraordinary shareholders meeting for approval on corporate name change and recapitalization plans, which all gained consents.
Doosan Infracore will change its corporate name as Hyundai Doosan Infracore and officially become a Hyundai Heavy Industries Group (HHI) family member. Hyundai Genuine Co., HHI’s holding entity for construction equipment business, bought Doosan Infracore for 850 billion won ($728 million) earlier this year.
Doosan Infracore will proceed with its financial improvement plans as condition to the buyout.
The company will carry out capital reduction at a ratio of 5:1 based on face value, a scheme that has met strong protest from minority shareholders over value dilution concerns. The retirement plan, however, passed the shareholder meeting as global proxy advisor Institutional Shareholder Services Inc. (ISS) saw little negative impact and recommended approval. Korea Investors Service also has revised up its credit rating for Doosan Infracore as it expected financial improvement.
Trading of Doosan Infracore shares will be suspended from Oct. 8 to 25 due to the capital reduction work, which will cut the face value of common stock to 1,000 won from current 5,000 won. Trading will resume on Sept. 26.
In addition to capital reduction, Doosan Infracore plans to issue up to 800 billion won worth of new shares to its parent within this year. The proceeds will be used to acquire a 20 percent stake in Doosan Infracore China, pay back debts, and invest in R&D projects for new technology.
On Friday, shares of Doosan Infracore fell 1.34 percent to close at 11,050 won. Hyundai Heavy Industries Holdings Co. finished 0.15 percent higher at 65,400 won. Hyundai Genuine is not listed.
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