POSCO FUTURE M

◈  Successful financing with a 103% subscription rate, far exceeding the target amount
◈  The largest paid-in capital increase in POSCO’s history with exceptional evaluation by investors for competitive business and growth potential after securing essential raw materials
◈ Investment to increase production capacity to respond to the soaring global demand for secondary cell materials
◈  Aiming to achieve 20% in world market share and 23 trillion won in sales by 2030

POSCO Chemical secured 1.2735 trillion won by increasing paid-in capital, laying the groundwork for its secondary cell business.

POSCO Chemical announced that it had achieved a 103% subscription rate in the subscription for capital increase targeting the employee stockholders association and the existing shareholders on January 13-14, 2021. The issuance price was 77,300 won and the number of shares to be issued was 16,475,000. The payment date for the shares is January 21, 2021, and the expected date for the listing of new shares is February 3, 2021.

The employee stockholders association, which was allocated 11.8% of all issued shares, subscribed for 1,919,027 shares, or 99% of the 1,944,050 shares. This is equivalent to 148.3 billion won. Existing shareholders subscribed for a total of 1,505,755 shares, including the 8.9 million shares from POSCO, the largest shareholder with a 61.3% stake.

With the paid-in capital increase, POSCO Chemical acquired investment resources that well exceed the target amount. The high subscription rate following the surge in stock prices pushed the amount procured to 1.2735 trillion won, surpassing the initial target of 1 trillion won. The expected issuance price per share was 60,700 won on November 6 last year, but the actual price rose to 77,300 won on January 8, 2021, reflecting the weighted arithmetic mean average of three to five trading days immediately before the subscription date, resulting in an increase of 16,600 won.

Regarding the successful procurement, POSCO Chemical said, “We have proposed our vision of making secondary cells as the POSCO Group’s core business for us to become a top-tier company in the world when conducting the largest paid-in capital increase in the history of the POSCO Group. This appears to have received favorable reviews from investors, resulting in the increased stock price and high subscription rate.”

In addition, anticipation for long-term growth of POSCO Chemical may have been reflected, as the company began achieving successful outcomes, which provide the company with a competitive edge, including the increase in the estimated volume of lithium in POSCO’s Argentina salt lake, the group’s announcement that it would invest in the raw material value chain for nickel and graphite, and the expanded supply of cathodes to Ultium Cells, a joint venture of GM and LG Energy Solution.

With the investment, POSCO Chemical will focus on pushing the production capacity for cathodes and anodes in response to the exponential growth in global demand. It will invest 690 billion won in existing facilities including Gwangyang cathode plant, and 150 billion won in building cathode production sites in Europe with skyrocketing demand for EVs. By 2030, the company will increase the production capacity from the current 40,000 tons to 400,000 tons for cathodes, and from 44,000 tons to 260,000 tons for anodes.

Thanks to the large-scale capital inflow, POSCO Chemical also secured a stable financial structure. The debt-to-equity ratio dropped from 104% on a consolidated basis at the end of Q3 in 2020 down to 46% after the capital increase. This will lay the basis for investments necessary for the expansion of mid- to long-term businesses, and significantly boost the corporate value.

POSCO Chemical will continue making investments aimed at augmenting the production capacity to drive the global market and transform the company into a top player in secondary cell materials boasting of differentiated competitiveness with raw materials, marketing, and processing technology fronts. The company has set a goal of winning 20% of the global market share and achieving 23 trillion won in sales for the secondary battery materials business by 2030.