Hyundai Heavy raises $1.1bn in rights issue

South Korean yard giant sees debt-to-equity ratio trimmed to 78% following fund raiser.

Hyundai Heavy Industries, the world’s largest shipbuilder, said it has raised KRW 1.23 trillion ($1.15bn) from a rights issue.

The new shares are set to be listed on South Korea’s main stock exchange on 27 March 2018, it said in a regulatory filing.

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Some KRW 820bn of the proceeds to improve its finances, with the remainder going towards research and development for eco-friendly and ‘smart’ ships.

The latest fund raiser has lowered Hyundai’s debt ratio to around 78% from the 89.9% seen at the end of December 2017.

Hyundai first announced plans for the rights issue in an announcement that sent its shares plummeting by up to 28% in late December.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.

Samsung Heavy Industries has announced plans for a similar KRW 1.5 trillion rights issue, while DSME was saved from collapse by a $2.6bn lifeline from state-owned lenders.

In June last year, Hyundai spun off its non-core businesses aimed at what it claimed would boost each business unit's competitiveness.

Under the plan, the shipyard split into four independent entities: shipbuilding, electronics, construction equipment and robotics.

Hyundai, which has around 7% of the world order book, said it has received newbuilding orders for 29 ships worth $2bn in the year to date.