[After CB Issuance] Leaders Rise on Yoon Seok-yeol Theme, Then Convert CB... "20% of Total Shares"

[Asia Economy Reporter Hyunseok Yoo] Investors in convertible bonds (CB) of Leaders Technology Investment, considered a theme stock of former Prosecutor General Yoon Seok-yeol, have hit the jackpot. The stock price rose more than 30% in just over a month, increasing the profits that can be gained through stock conversion. However, the CB conversion volume exceeds 20% of the total shares. Additionally, the remaining mezzanine volume, including CBs and bonds with warrants (BW), accounts for up to 40% of the total shares, raising concerns about overhang (potential sell-off volume) for some time.

According to the Financial Supervisory Service’s electronic disclosure system (DART) on the 11th, Leaders Technology Investment announced on the 9th that conversion rights for the 3rd and 5th series CBs had been exercised. The scheduled listing date is the 24th of this month.

Leaders Technology Investment issued the 3rd series CB in January 2019 for operating funds. The total amount was 6 billion KRW, with a nominal interest rate of 0% and a maturity interest rate of 4%. The issue price at that time was 684 KRW. The 5th series CB was issued in May 2019 with a total amount of 10 billion KRW. The nominal and maturity interest rates and issue price were the same as the 3rd series.

Investors converting to stocks this time have hit the jackpot. The company’s closing price on the previous day was 1,210 KRW, up 30.95% compared to the end of last month. The stock price rose following news that Hong Kyung-pyo, the central chairman of 'Yunsamo' (a group loving Yoon Seok-yeol), was appointed as a financial investment advisor. The conversion prices for the 3rd and 5th series CBs of Leaders Technology Investment are 671 KRW and 684 KRW, respectively. If the stock price is maintained until the listing date, investors can achieve a return of over 80%.

However, the volume converted into stocks is a burden. The amounts converted this time are 6 billion KRW and 9.4 billion KRW. In terms of shares, these correspond to 8,941,873 shares and 13,742,682 shares, which are 8.99% and 12.68% of the total shares (99,410,066 shares), respectively. This means that more than 20% of the total shares could be released at once through this CB conversion.

There are still remaining CBs. Leaders Technology Investment issued the 3rd, 4th, 5th, 6th, 11th, and 12th series CBs from 2019 to last year. Excluding the 3rd and 5th series being released this time and the already converted 4th and 6th series, 11 billion KRW worth remains. Including the 9th series BW worth 12.8 billion KRW, the total number of shares that could be newly issued is 42,496,485 shares, accounting for 42.74% of the total shares.

Among these, the exercise period for the 9th series BW is from November 14, 2019, to September 24, 2024. The 10th series CB can be converted from September 24, 2023, to September 24, 2023; the 11th series from October 23, 2023, to September 23, 2023; and the 12th series from December 24, 2023, to November 24, 2023.

Meanwhile, Leaders Technology Investment, a specialized new technology investment company, is a new technology business finance company that supports small and medium venture companies to grow into excellent companies through venture investment and management consulting. This company, which closes its fiscal year in March, recorded a cumulative operating profit of 30.1 billion KRW in the third quarter of last year (April to December).