[After CB Issuance] IEXT, Issued CB 4 Times This Year... Overhang Concerns '↑'

Issuing 25 Billion KRW Worth of CBs in the Second Half of This Year
Conversion Timing Concentrated in the Second Half of Next Year
From the 4th to the 8th Round... Up to 20% of Total Shares Convertible

[Asia Economy Reporter Yoo Hyun-seok] EXTI issued convertible bonds (CB) four times in the second half of this year alone to raise funds for acquiring other companies. The convertible volume from CB issuance currently corresponds to 20% of the total issued shares. Depending on the performance of new businesses, concerns about overhang (potential sell-off volume) may arise when the CB conversion period arrives one year later.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 27th, EXTI has consecutively issued CBs since August, raising 25 billion KRW.

In August, the company issued the 5th and 6th series CBs worth 7 billion KRW and 3 billion KRW, respectively. The 5th series has a nominal interest rate of 5% and a maturity interest rate of 8%. SangSangIn Savings Bank and SangSangIn Plus Savings Bank invested 4 billion KRW and 3 billion KRW, respectively. The purpose of issuance was to acquire securities of other companies. The 6th series targeted Philux, with both nominal and maturity interest rates at 1%. The purpose was the same as the 5th series: acquisition of securities of other companies.

EXTI did not stop there and issued the 7th series CB worth 10 billion KRW last month to Meritz Securities. The purpose is to use 7 billion KRW for acquiring other companies and 3 billion KRW for other uses, with nominal and maturity interest rates of 2% and 3%, respectively. This month, the company also issued a CB worth 5 billion KRW to KAH Global Partnership. The nominal and maturity interest rates are 3.5% and 5%, respectively. The purpose was to acquire securities of other companies.

The company plans to use the 5th and 6th series CBs to acquire shares held by Inmark Specialized Investment-type Private Real Estate Investment Trust No. 24, an investor in the Grand Hyatt Hotel Seoul. The exact investment targets for the 7th and 8th series have not yet been disclosed. However, once confirmed through a board resolution, the company will re-disclose the details.

Established in 2004, EXTI is a construction foundation material pile company specializing in architectural and civil engineering foundation work and ground fields. Its main products include the Point Foundation (PF) method, multipurpose small-diameter pile (SAP) method, and Ext (EXTI) pile products. The cumulative sales and operating profit for the third quarter of this year were 33.6 billion KRW and 2.7 billion KRW, respectively, marking increases of 48.4% and 17.4% compared to the same period last year.

Investors holding CBs issued by EXTI, which has stable performance, can steadily collect interest and convert to common stock by comparing the stock price and conversion price when the conversion period arrives. The conversion prices for the 5th and 6th series are 2,790 KRW. For the 7th and 8th series, they are 3,050 KRW and 2,715 KRW, respectively. EXTI's stock price was 2,885 KRW the previous day.

Having raised a large-scale fund of 25 billion KRW in just four months, overhang issues may also emerge. This makes the future stock price direction important. If the stock price falls due to lack of performance in new business ventures such as acquiring other companies' stocks, the conversion price may be adjusted additionally, increasing the volume to be released.

Among the CBs issued so far, the only one currently convertible to stock is the 4th series CB issued last September worth 10 billion KRW. Half of the 4th series, 5 billion KRW, was already converted to stock last month. Excluding this, 1,817,520 shares can still be converted to stock. The exercise price is 2,751 KRW.

From the 5th series onward, stock conversion is possible starting next year. The conversion period for the 5th and 6th series begins on August 10 next year. The convertible shares are 2,508,960 and 1,075,268 shares, respectively. The 7th series can be converted from October 21 next year, with 3,278,688 shares. The 8th series, convertible from November 17 of the same year, totals 1,841,620 shares.

The total convertible shares from the 4th to 8th series amount to 10,522,056 shares. EXTI's total issued shares are 52,516,983 shares. This corresponds to 20% of the total volume. Even excluding the 7th series, 13% of the total can be converted to stock.

Last year, the largest shareholder changed to IT parts company Jangwon Tech, and recently, EXTI signed a memorandum of understanding (MOU) with the medical artificial intelligence (AI) platform company 'DOAI (DueAI)' and announced its full-scale entry into the 'Bio Digital New Deal' business.