Samsung Heavy raises $1.1 bn in rights issue as planned

South Korea's Samsung Heavy Industries Co. last week raised 1.3 trillion won ($1.1 billion) in a rights issue to existing shareholders as planned, as part of an effort to improve its financial conditions.

The new shares were offered at 5,130 won apiece, about 20% less than the market price of 6,380 won as of Friday's close, according to the company's regulatory filing.

Its top shareholder Samsung Electronics Co., other Samsung Group units participated in the rights offering, along with the company's employee stock ownership association.

Unless the share price of Samsung Heavy drops below the new issuance price until the listing day of Nov. 19, they are expected to pocket capital gains.

The 250 million new shares were about 3% oversubscribed. Brimming with heavy order backlogs, Samsung and other South Korean shipbuilders have secured enough orders to keep operations in full swing until the first half of 2024.

Samsung already surpassed its full-year target of $9.1 billion in new orders received as of end-October and revised the 2021 target upward to $11.1 billion. Last week, it added 971.3 billion won worth of four LNG ship orders placed by a shipper from Burmuda, according to the company's filing on Oct. 25.

Clarkson Newbuilding Price Index, which tracks price changes in newly built ships, has climbed 20% year to date to 150.14 on Oct. 22. It was the first time for the index to top the 150 mark since July in 2009.

Shipbuilding prices are expected to maintain their upward trend amid the booming shipping industry. Rising ship prices are expected to offset the price increase in steel plates, the key material of vessels.