Tatung Co’s (大同) share price plunged 9.92 percent yesterday, as investors reacted negatively to its plan to raise fresh funds.
The home appliance supplier plans to raise NT$7 billion (US$233.58 million) by issuing 500 million new common shares to repay bank loans, improve its financial structure and replenish its operating capital, the company said in a statement released on Thursday night.
The company set its subscription price at NT$14 per share — a 29 percent discount to its closing price of NT$19.65 on Wednesday.
That spurred a wave of selling yesterday, with the stock nosediving to close at NT$17.7 in Taipei trading, snapping a three-session winning streak.
Shares of Tatung have jumped 105.97 percent to date this year, outperforming the broader market’s 13.35 percent increase over the sameperiod, Taiwan Stock Exchange data showed.
“The stock has climbed to a relatively high level in the short term, and the capital-raising plan triggered a sell-off as investors dumped their holdings and look to use the proceeds to buy new shares and gain from the disparity,” Jih Sun Securities Investment Consulting Co (日盛投顧) said in a note.
Tatung said that part of the proceeds, about NT$2.6 billion, is to be used to fund new solar investment projects as part of its efforts to seek new revenue resources in the “green” energy supply chain.
About NT$2.3 billion are to be spent to build a new ground-mount solar farm in Tainan’s Cigu District (七股) through its fully owned subsidiary Tung-Yang Co (同陽能源), the statement said.
The Tainan plant will have an annual installed capacity of 40 megawatts.
That is not Tatung’s first investment in solar energy, with the company having tapped into the solar panel installation sector for years.
Tatung expects its solar panel installations, mainly rooftop models, to grow 50 percent year-on-year to 75 megawatts this year.
The company is shifting its focus to building large-scale ground-mount and floating solar systems, it said.
The latest solar system installation project is awaiting approval by the Tainan City Government, Taiwan Power Co (台電) and the Ministry of Economic Affairs.
Tatung plans to use the remaining NT$300 million from its proceeds to subscribe to about 20 million new common shares of its solar wafer manufacturing unit, Green Energy Technology Inc (綠能科技), which plans to use the money to build a new diamond-wire cutting system to lower manufacturing costs.
Tatung’s board on Thursday also agreed to speed up disposal of several subsidiaries that have been performing poorly or are not relevant to its core business.
It is looking to sell Tatung Vietnam (大同越南), Tatung Global Strategy Investment and Trading (BVI) Inc and Tatung InfoComm Co (大同電信), the statement said.
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