Samsung SDI President and CEO Choi Joo-sun (Joint Press Corps.)
Samsung SDI President and CEO Choi Joo-sun (Joint Press Corps.)

Samsung SDI faced shareholder backlash following a drop in stock price after raising 2 trillion won ($1.4 billion) through a paid-in capital increase to fund battery facility investments.

During a shareholders meeting on Wednesday, concerns were raised about why the company opted for a capital increase rather than issuing corporate bonds, which could have protected existing shareholders’ interests. A capital increase involves issuing new shares to raise funds without incurring interest burdens, unlike bank loans or bonds, but it often negatively impacts stock prices by diluting existing shareholders’ equity.

Earlier in the day, reports emerged that the Financial Supervisory Service had selected Samsung SDI as the first company to undergo its newly introduced review system for paid-in capital increases.

Samsung SDI CEO Choi Joo-sun addressed the situation, saying, “We will thoroughly explain the purpose of the capital increase to the authorities,” during a meeting with reporters in Gangnam, Seoul. He added that he only learned of the FSS review through media reports.

Later in the day during a press briefing, FSS Governor Lee Bok-hyun said, “Samsung SDI’s capital increase is a positive investment. … We will ensure that investors are well-informed about the capital increase and expedite the review process so the company can secure funding swiftly.”

Samsung SDI CFO Kim Jong-sung explained the rationale behind the capital increase, stating, “Our financial structure has weakened due to significant capital expenditures and proactive (research and development) investments aimed at mid-to-long-term growth.” He emphasized the need to strengthen financial stability to navigate external and internal volatility.

Kim further noted that the company’s borrowings have increased by over 5 trillion won in the past year and are expected to rise further in 2025 and 2026. He added, “With interest rates rising, securing funding has become increasingly challenging. This is why we prioritized the capital increase.”

He also mentioned that Samsung Electronics, Samsung SDI’s largest shareholder, may participate in the capital increase while the company explores alternative funding options such as issuing corporate bonds or leveraging other assets. The funds raised will be allocated to investments in its US joint venture with General Motors, Hungarian plant and next-generation technologies, including all-solid-state batteries.

When asked about the potential repeal of the US Inflation Reduction Act under a second Donald Trump administration, Choi responded, “The three major battery companies — LG Energy Solution, Samsung SDI and SK On — are working with the Korea Battery Industry Association and we have dispatched representatives to Washington to address the issue.”

Following the shareholders meeting, Samsung SDI’s stock price once dipped below 191,000 won but bounced back to 192,100 won at the closing bell, marking a 0.68 percent increase from the previous trading day.


hyejin2@heraldcorp.com