LGES may not be able to go public this year Korean battery maker needs to receive approval from KRX within this week

Translated by Kim So-in 공개 2021-10-07 08:00:05

이 기사는 2021년 10월 07일 07:57 더벨 유료페이지에 표출된 기사입니다.

South Korea's LG Energy Solution (LGES), LG Chem’s battery unit, is facing an imminent deadline to list its shares within this year.

LGES is unlikely to make its market debut by the end of this year unless it receives approval from South Korea’s stock exchange operator Korea Exchange (KRX) this week due to the 135-day rule by the U.S. Securities and Exchange Commission (SEC), industry sources said on Wednesday.

The battery maker's initial public offering (IPO) is set to be the largest ever in the country, with a target to raise at least 10 trillion won ($8.38 billion) through a listing. The company needs to comply with the 135-day rule as it needs foreign institutional investors for its deal. The U.S. SEC requires companies to complete their IPOs within 135 days of drafting their financial statements, which are included in the registration statements provided to foreign investors.

Referred to as the 135-day rule, LGES needs to complete its listing procedures by November 12. To do so, the company would need to complete the IPO subscription for retail and institutional investors by early November. It needs to submit its prospectus in the second week of October to set its IPO price by the end of October through a book building process.

LGES should receive approval from the KRX in the first week of October to proceed with this plan. But the KRX is unlikely to give the nod this week because the cost of the GM’s second recall, which would affect the LGES’ corporate value, has not yet been finalized. The KRX already postponed LGES’ IPO once due to the GM’s first recall of the Chevrolet Bolt electric vehicle (EV).

LGES applied for a preliminary review by the KRX of its IPO plan on June 8. The company had been expected to get approval on August 9, but the U.S. automaker issued a recall for its 2017-2019 Bolt EVs in July.

The KRX ordered the company to include a possible impact of the recall on LGES which supplied battery cells for the model. LGES set aside 91 billion won as a provision expense for the Bolt EV recall. However, GM announced a second recall of its Bolt EVs on August 20.

LG Electronics and LGES’s joint investigation is reportedly underway to identify and detect the defective modules. GM must first determine the total expense of the second recall and LGES then has to determine how to share the expense with LG Electronics.

Market experts think LGES is unlikely to list its shares by the end of this year since the process hasn’t been completed yet. (Reporting by Kyung-ju Lee)
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