[After CB Issuance] Itec, Conversion Claims Begin... Caution for 'Bomb' of 30% Total Volume

[Asia Economy Reporter Yoo Hyun-seok] ITEC's 2nd tranche convertible bonds (CB) are being converted into stocks. Nearly 13% of the total shares are expected to be released into the market. Additionally, the conversion period for the 3rd tranche, which exceeds 20% of the total, is approaching, so the overhang (potential sell-off volume) issue is expected to continue.

According to the Financial Supervisory Service's electronic disclosure system on the 20th, ITEC announced the day before that 4 billion KRW worth of 2nd tranche CBs will be converted into stocks. The scheduled listing date is the 6th of next month. Along with this, on the 16th, it also announced that 7.3 billion KRW worth of CBs will be converted into stocks. The conversion date is the 30th of this month.

ITEC issued 11.5 billion KRW worth of CBs in July last year. The nominal and maturity interest rate is 1%. The conversion period is from the 15th of last month to June 15, 2023. The number of convertible shares is 1,894,875 shares, which corresponds to 12.86% of the current total shares. The conversion price was 6,069 KRW with no refixing. The issuers were the largest shareholder Portland Asia, Ms. Woo Mi-seon, and Carnia Investment Association, with 3 billion KRW, 1.5 billion KRW, and 7 billion KRW respectively.

ITEC closed trading at 10,500 KRW the day before. If the stock price continues at the closing price until the stock conversion date, an approximate return of 73% can be expected.

However, for other shareholders, the volume converted into stocks is a burden. The number of shares converted from the CB announced on the 16th is 1,202,833 shares, accounting for 8.16% of the total. Also, the day before, it was 4.47%, so about 12% of the volume will be released within about a week.

The 3rd tranche CB is an even bigger burden. In November last year, ITEC issued 20 billion KRW worth of 3rd tranche CBs. The nominal and maturity interest rate is 1%, and the conversion price is 7,050 KRW. The issuers were Cromer Investment Association, Fortuna Investment Association, and Wooridle Hubrain, with 7 billion KRW, 6 billion KRW, and 7 billion KRW respectively.

The number of shares that can be issued is 2,836,879 shares, which accounts for 19.26% of the current total shares. The conversion period is from November 13 to October 13, 2023, so conversion will be possible in a few months. Especially since the current stock price is higher than the conversion price, conversion into stocks is possible.

ITEC is a post-processing specialist company focusing on system semiconductor wafers and semiconductor chip testing. It also operates cosmetics manufacturing and sales businesses through its affiliates.

Recently, it has been expanding into new businesses. In January, it secured a 53.1% stake in Songjeong Pharmaceuticals, entering the vaccine and specialty pharmaceutical distribution business. Also, through its subsidiary ITECH H&D, it acquired a 29.38% stake in Dongwoo Tech, which possesses cold chain ICT technology, and is conducting a pharmaceutical cold chain platform business.