Increased Likelihood of 20% of Total Shares Being Released
Conversion Price Must Rise Over 100% from Current Stock Price to Recover
Cash Assets of 1.7 Billion Won... Financial Burden on Company '↑' if Repayment Demanded
The conversion price of Yuil Enertech's 2nd tranche convertible bonds (CB) has dropped to the lowest level. As the conversion price lowered to the minimum, the number of shares that can be issued increased to more than 20% of the total shares, raising concerns about overhang (potential large-scale sell-off). Additionally, the large gap between the stock price and the conversion price is expected to burden the company's finances if investors request redemption.
According to the Financial Supervisory Service's electronic disclosure system on the 23rd, Yuil Enertech recently announced that the conversion price of the 2nd tranche CB was lowered from 3,771 KRW to 2,640 KRW. This is the minimum conversion price. As a result, the number of shares that can be issued increased from 5,303,632 shares to 7,575,757 shares.
Yuil Enertech issued 20 billion KRW worth of 2nd tranche CBs in May this year. The nominal and maturity interest rates are 2% and 3%, respectively. The company stated that it would use 9 billion KRW to repay borrowings (1st tranche CB) and 11 billion KRW for operating funds (raw material purchases). The 1st tranche CB was fully repaid in August this year.
The conversion request period is from May 17, 2025, to April 17, 2027. If the CB is converted into shares next year, concerns about overhang are also emerging. Up to 22.14% of the total 34,104,450 shares could be released into the market.
However, if the current stock price continues, CB investors may request redemption. On the 20th of this month, Yuil Enertech's closing price was 1,303 KRW. To reach the 2nd tranche CB conversion price, the stock would need to rise by 102.61%, indicating a significant gap.
Especially if early redemption is requested, it is expected to burden the company. As of the third quarter consolidated financials this year, Yuil Enertech's cash and cash equivalents amounted to only 1.75912 billion KRW.
In the case of Yuil Enertech, sales continue to grow, but the company has not escaped losses. As of the end of the third quarter, sales were 42.69048 billion KRW, a 72.82% increase compared to the same period last year. However, operating losses widened to 9.66335 billion KRW.
Founded in 2012, Yuil Enertech produces specialized equipment applied in the assembly process of secondary battery manufacturing. It supplies products to major global battery companies both domestically and internationally. Its main products are equipment related to electrode cutting and stacking.
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