Jusung Engineering: Announces Equity Spin Off + Physical Division Split

• On 2 May, Jusung Engineering (036930 KS) announced an equity spin-off as well as a physical division split.

• We are negative on this combination of equity spin-off and physical division split of Jusung Engineering.

• After the two units are listed on 6 December 2024, it is likely that the semiconductor unit (Jusung Engineering Co) will rise while Jusung Holdings Co is likely to decline.

On 2 May, Jusung Engineering (036930 KS) announced an equity spin-off as well as a physical division split. It is unusual for a Korean company to announce a combination of an equity spin-off and a physical division split at the same time. Jusung Engineering currently has a market cap of 1.7 trillion won (US$1.2 billion). It is currently the 25th largest stock in KOSDAQ by market cap.

I. Equity Spin-Off [Jusung Engineering Co & Jusung Holdings Co]

First, Jusung Engineering announced that it will conduct an equity spin-off. The surviving company will be the listed corporation Jusung Holdings Co (tentative name) which will be in charge of the investment and management of the subsidiaries and invested companies as well as making new investments.

The newly spun off company will be called Jusung Engineering Co (tentative name) which will focus on semiconductor equipment research, development, manufacturing, and sales. In this equity spin-off, the shareholders are allocated shares of the newly created company in proportion of their shareholding ratio as of the record date for allocating new shares after the equity spin-off. The effective date of the equity spin off is on 1 November 2024.

Based on the company's balance sheet at the end of 2023, the net asset value of the business units are divided as follows: Jusung Holdings Co (surviving company) - 0.6506550: Jusung Engineering Co (newco) - 0.3493450.

The following are the major important dates of the equity spin-off of Jusung Engineering Co.

• Shareholders confirmation date - 2 September 2024

• Scheduled date of general shareholders' meeting - 8 October 2024

• New share allocation date - 31 October 2024

• Effective date of the equity spin-off - 1 November 2024

• Shares temporarily stop trading - 30 October to 5 December 2024

• New shares listing date - 6 December 2024

After the equity spin-off, Jusung Holdings Co. plans to increase paid-in capital through in-kind contribution through a tender offer for the shares of Jusung Engineering Co. in order to convert it into a holding company. The paid-in capital increase through in-kind investment through a tender offer involves receiving an in-kind contribution of the relevant stocks from the shareholders holding registered common stocks of the newly established spin-off company and applying for the tender offer. However, at this time, the size and specific schedule of capital increase through in-kind investment have not been confirmed.

After the equity spin-off, the following will be the major balance sheet financials of the two entities.

• Jusung Holdings Co. (surviving company) : Assets - 560.9 billion won; Liabilities - 226.6 billion won; Equity - 334.2 billion won

• Jusung Engineering Co (newco) : Assets - 238.8 billion won; Liabilities - 53.5 billion won; Equity - 185.3 billion won