South Korea’s Samsung Heavy Industries Co. decided to keep the rights offering to a minimum of up to 1 trillion won ($908 million) and won’t allocate a portion to be bought by Samsung Group heir apparent Jay Y. Lee for personal bailout of the troubled shipbuilding unit of the conglomerate.

According to the shipbuilding and financial industry on Monday, the shipbuilder will hold a shareholder meeting on Friday to up the ceiling for outstanding shares from current 300 million shares to 500 million to allow new issues and receive go-ahead for the new fund-raising plan.

Some industry watchers predicted that the new issues won’t exceed 1 trillion won as recent due diligence found that the company’s liquidity problem was not as bad as originally projected. The rights offering won’t go beyond 50 percent of its 230 million shares already in circulation, according to a source from the financial industry.

Given the stock price of Samsung Heavy ended at 9,320 won on Friday and 15 percent discount, the new issues would amount to around 900 billion won, smaller than 1.3 trillion won offering sought by Samsung Engineering Co. in February this year to improve its capital base.

The due diligence report by Samjong KPMG found that the company’s liquidity shortage would be 800 billion won to 1.6 billion won over the next five years. The rights offering worth 1 trillion won would be enough for the company to stay afloat given that it has already submitted its self-rescue plan to come up with 1.4 trillion won to its main creditor Korea Development Bank in June.

Samsung Electronics vice chairman Jay Y. Lee who has taken control of the group on behalf of his bedridden father Lee Kun-hee won’t buy the new shares. Samsung Group affiliates will increase their stake in the shipbuilder through new purchase. A combined 24.08 percent stake in Samsung Heavy Industries is held by Samsung affiliates including Samsung Life Insurance Co., Samsung Electro-Mechanics Co., Samsung SDI Co., Cheil Worldwide Inc. and Samsung C&T Corp., with Samsung Electronics holding the largest 17.61 percent.

Samsung Heavy Industries stocks rose 4.94 percent to 9,780 won as of 1:07 p.m. in Seoul trading on Tuesday.

By Park Yong-beom and Kang Doo-soon

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