BHI announced on the 25th that the entire first tranche of convertible bonds (CB) has been fully converted, increasing the likelihood of BHI’s participation in large-scale global projects. With debt worth 20 billion KRW converted into equity, the debt ratio is expected to improve by more than 200%, enabling BHI to bid for more projects based on its strengthened financial structure.
The investors who decided to convert the convertible bonds into shares are in a ‘strategic partner’ relationship with BHI and will hold the shares long-term. There is no expectation of sell-off pressure from investors due to the conversion.
BHI continuously requested conversion from strategic partners to lower its debt ratio and strengthen conditions for participating in large-scale global projects through the convertible bond conversion. According to the company, the convertible bond investor, ‘Seven Bridge-IBKC Green Energy New Technology Investment Association (hereinafter Seven Bridge Investment Association),’ decided on this stock conversion considering expectations of a full-scale performance improvement and the continuous increase in overseas orders for projects such as nuclear power and combined cycle power generation.
BHI announced on the 25th, through a disclosure on the 24th, that the conversion rights for 4,944,375 shares of the first tranche of convertible bonds have been exercised. The conversion price is 4,045 KRW, and the scheduled listing date is August 7. The number of shares exercised through the conversion rights accounts for about 16% of the total issued shares.
In large-scale plant industries like BHI’s, large amounts of capital are required compared to other industries, so institutions and companies placing orders place great importance on the debt ratio of the contracting company. Convertible bonds are ‘mezzanine securities’ that can be converted into shares but are recognized as debt under accounting standards until conversion.
In February last year, BHI successfully raised 20 billion KRW in funding, recognized for its high technological capabilities and the high growth potential of its businesses in nuclear power, combined cycle power generation, and green hydrogen. However, as the debt ratio increased, the company faced many restrictions in bidding for large-scale overseas projects.
A BHI official said, “This conversion aims to participate more aggressively in large-scale global projects based on the effect of improving the financial structure,” adding, “The Seven Bridge Investment Association confirmed BHI’s long-term growth potential and chose conversion over repayment, so there will be no sell-off. Therefore, the large-scale conversion event itself can be seen as positive news for the company.”
Typically, when convertible bonds are converted and immediate profits arise, convertible bond investors promptly sell their shares, which negatively affects the stock price. However, this BHI convertible bond conversion can be seen as an event confirming a long-term partnership between the company and investors without any stock sell-off.
A BHI official emphasized, “We fully understand investors’ concerns regarding this conversion request,” and added, “The stock price decline following the conversion disclosure reflects excessive worries. There is no risk of sell-off, and the strengthened financial structure lays a meaningful foundation for continuously building trust with investors toward the future.”
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