Convertible Shares Reach 1.12 Million, Accounting for 25% of Total Shares
Continued Operating Losses Last Year... Cash and Cash Equivalents Only 1.17 Billion KRW
The stock price of Nano CMS has been continuously declining, raising concerns about overhang (potential pending supply). This is because the conversion price of the 3rd tranche convertible bonds (CB) has dropped to the lowest level. With continued poor performance, financial burdens are expected to increase if redemption demands arise.
According to the Financial Supervisory Service's electronic disclosure system on the 26th, Nano CMS recently announced that the conversion price of the 3rd tranche CB was adjusted from the previous 10,150 KRW to 7,105 KRW. This adjustment was due to the decline in market price.
Nano CMS issued 8 billion KRW worth of 3rd tranche CB in June last year to operate silicon carbide (SiC) production facilities. The issuance target was KDBC-Caspian T 4th New Technology Investment Association. The coupon rate and maturity interest rate are 0% and 3.5%, respectively. However, as of the third quarter of last year, the funds raised through the 3rd tranche CB have not been used and remain in short-term financial products.
This adjustment in the conversion price has increased concerns about overhang. The number of shares that can be issued increased from 788,177 shares to 1,125,968 shares. This represents a large volume equivalent to 25.92% of the total 4,343,920 shares.
If the bonds are not converted into shares, it is expected to become a burden on the company. The conversion request period for the 3rd tranche CB is from June 24, this year, to June 18, 2029. The maturity date is June 24, 2029. CB investors can exercise the early redemption right (put option) from October 25 this year.
Nano CMS continues to operate at a loss. It recorded an operating loss of 9 billion KRW last year, maintaining its deficit. Sales increased by only 1.5% to 4.6 billion KRW. As of the third quarter of last year, Nano CMS's cash and cash equivalents amounted to only 1.17368 billion KRW. Additionally, short-term financial products totaled 13 billion KRW.
The stock price of Nano CMS was 6,320 KRW the day before. For the conversion price to be exceeded, the stock price needs to rise by more than about 12%, increasing the likelihood of conversion into shares.
Nano CMS was established in 2003 based on basic research related to nano materials. Using independently developed patented nano new material technology, it produces 'special organic metal functional materials for anti-counterfeiting.'
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