[After CB Issuance] Naintech Conversion Price Falls to Limit After 10 Months

[Asia Economy Reporter Yoo Hyun-seok] NineTech's second tranche convertible bonds (CB) have dropped to the conversion price floor. Since the current stock price is below the conversion price, the future direction has become important.

According to the Financial Supervisory Service's electronic disclosure system on the 2nd, NineTech announced on the 27th of last month that the conversion price was lowered from 4,349 won to 4,075 won.

NineTech issued the second tranche CB worth 17 billion won in January. It planned to use 11.9 billion won for operating funds and 5.1 billion won for debt repayment. The issuance target was NH Synergy Small and Medium Materials New Technology Investment Association. The issuance price was 5,821 won. This is the third adjustment of the conversion price for the second tranche CB following April and July. With this adjustment, the conversion price has dropped to the minimum limit.

As the conversion price dropped to the minimum, the number of shares that can be issued increased. At the initial issuance, the convertible shares were 2,920,460 shares, but now it has increased to 4,171,779 shares. This corresponds to 10.59% of the total shares. The increase in the number of shares that can be issued has raised concerns about overhang. The conversion period for the second tranche CB starts from January next year.

Additionally, the fact that NineTech's current stock price is below the conversion price is a concern for the company. The stock price, which rose to 6,840 won intraday in January, fell to 2,910 won on the 6th of last month. Although the stock price has recently rebounded, the closing price yesterday was 3,210 won, showing a significant gap from the conversion price.

If the CB is not converted into shares, the company must redeem it. As of the first half of this year, NineTech's cash and cash equivalents and short-term financial products amount to 9.7 billion won each. The maturity date of the second tranche CB is January 27, 2026. Therefore, the future stock price direction has become crucial.

NineTech was established in 2006. It started as a display equipment company and later expanded its business to secondary battery assembly process equipment. It recorded sales of 42.1 billion won in the first half of this year, a 22.56% increase compared to the same period last year. However, it posted an operating loss of 3.4 billion won, turning to a deficit compared to the previous year. By business division, equipment for secondary battery manufacturing accounts for 71.4% of total sales, while display manufacturing equipment accounts for 27.5%.