[At a Crossroads for Listed Companies] PSMC, Splitting Shares and Par Value CB... Beware of a Volume Bomb Warning①

[Asia Economy Reporter Jang Hyowon] The owner of PSMC, which concluded its management rights dispute last year, is changing. The new largest shareholder plans to acquire shares by splitting them. Additionally, the company will issue convertible bonds (CB) worth 20 billion KRW, with a refixing limit (price adjustment cap) up to the face value, raising concerns that the potential volume released into the market could significantly increase.

According to the Financial Supervisory Service's electronic disclosure on the 26th, PSMC's largest shareholder F&TI and five others signed a contract on the 21st to transfer 13,465,902 shares (33.65%) of management rights stocks to Jil Isam Gong Education Co., Ltd. (G1230 Education) and TCS Korea at 1,708 KRW per share, totaling 23 billion KRW.

The structure is such that Jil Isam Gong Education acquires 8,782,150 shares (21.94%), and TCS Korea acquires 4,682,752 shares (11.71%). Upon completion of the contract, Jil Isam Gong Education will become the largest shareholder of PSMC.

PSMC is also conducting a third-party allotment capital increase worth 1 billion KRW. The new share issuance price is 1,795 KRW, with a total of 557,103 new shares to be issued. The allottee is Kim Jae-eon, who is presumed to be the representative of TCS Korea, which acquired shares from F&TI.

Along with this, PSMC has decided to issue convertible bonds worth 20 billion KRW. The bondholders are Capital From Eclipse and Seo Young. The conversion price is 1,750 KRW per share. If all CBs are converted into shares, 11,428,571 new shares will be issued, accounting for 28.55% of the current total shares.

The refixing limit of this CB is up to the face value of 500 KRW, unlike the usual 70%. Refixing is a condition that adjusts the conversion price of CBs when the company's stock price falls. As of the previous day, PSMC's stock price was 2,380 KRW, so even if it falls by 78%, it remains above the face value, meaning investors can still profit.

However, since the conversion price would be lowered in this case, the number of shares to be issued increases, which acts as a dilution factor for existing shareholders. If the conversion price drops to 500 KRW, 40 million shares will be issued as compensation for CB conversion. This is nearly equivalent to the total number of shares currently issued by PSMC entering the market.

Consequently, concerns about potential volume have emerged in the market. Excluding the management rights shares held by Jil Isam Gong Education, the combined shares held by TCS Korea and the maximum convertible volume of CBs amount to a total of 45,239,855 shares that could be released into the market. This volume corresponds to 56% of the total shares after conversion.

Moreover, there is also the volume held by Hanjung Construction, which still owns 5 million shares (12.49%). Last November, Hanjung Construction acquired 11 million shares of PSMC from Gyeongnam Pharmaceutical Healthcare, which was engaged in a management rights dispute with F&TI.

Since then, Hanjung Construction has repeatedly sold shares on the market whenever PSMC's stock price rose, disposing of 6 million shares as of this day. Depending on future stock price trends of PSMC, this volume is analyzed as potentially entering the market at any time.

This content was produced with the assistance of AI translation services.