Jungang Advanced Materials Joins Enchem Affiliate... "Stabilizing Governance and Resolving Overhang"

Jungang Advanced Materials is set to fully integrate into the Enchem Group affiliates. On the 12th, Jungang Advanced Materials announced through a public disclosure that Enchem will convert approximately 471,293,939 convertible bonds (CB) worth about 22 billion KRW into common shares. This corresponds to about 5% of the total issued shares.

Although the exercise of conversion rights is generally known to negatively impact stock prices, this conversion will relieve Jungang Advanced Materials of the overhang (large volume of shares waiting to be sold). Additionally, securing Enchem’s stake will accelerate the stabilization of the governance structure between the two companies and maximize business synergy through responsible management.

Last May, the two companies established a joint venture (JV) called EDL to jointly develop the lithium salt (LiPF6) business, forming a business partnership. Lithium salt (LiPF6) is a key raw material for electrolytes, one of the four major materials in secondary batteries.

Jungang Advanced Materials holds a 50% stake in EDL and is developing a large-scale lithium salt business centered around the Saemangeum National Industrial Complex. While localizing lithium salt (LiPF6), which has a high import dependency, the company aims to become a global top-tier player by building its own production facility at a world-class scale of 50,000 tons.

Jungang Advanced Materials plans to increase its stake in EDL through additional investments as early as the second half of this year. By incorporating EDL as a consolidated subsidiary, it aims to strengthen its position as a secondary battery materials company and quickly realize performance improvements based on a stable captive sales foundation.

A representative from Jungang Advanced Materials stated, “The exercise of Enchem’s conversion rights is part of stabilizing the governance structure between the two companies,” adding, “It was decided earlier than planned to enhance business synergy and smoothly handle matters related to profit distribution arising from the lithium salt business in the future.”

He continued, “The secondary battery ‘lithium salt’ business is expected to accelerate its progress and expansion based on the vertical structure of ‘Enchem-Jungang Advanced Materials-EDL,’” and added, “This will simultaneously resolve governance issues raised between Enchem and Jungang Advanced Materials and increase corporate value.”