[After CB Issuance] A-Route Sells 16% of Total Shares at Once... Investors Hit the Jackpot

[Asia Economy Reporter Hyunseok Yoo] All convertible bond (CB) investors of Airoot have simultaneously started converting their bonds into shares. The volume, equivalent to 16% of the total shares, could flood the market, raising concerns about overhang (potential sell-off pressure). However, CB investors are expected to record returns of over 80%.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 9th, Airoot announced on the 7th that the 7th, 10th, 15th, and 16th series of CBs will be converted into shares. The scheduled listing date is the 27th of this month.

By series, the 7th series will convert into a total of 101,502 shares at a conversion price of 4,926 KRW. The 10th series will convert 157,034 shares at a conversion price of 4,776 KRW. The 15th and 16th series have a conversion price of 4,855 KRW, with 514,933 shares and 1,338,825 shares respectively to be issued as stock. The total amount is approximately 10.25 billion KRW.

CB investors have an opportunity to gain substantial profits. Airoot recorded a closing price of 8,940 KRW as of the previous day. Expected returns are 81.49% for the 7th series, 87.19% for the 10th series, and 84.14% for the 15th and 16th series.

However, this is expected to put pressure on the stock price. The volume to be converted into shares this time corresponds to 16.43% of the total shares outstanding (12,852,860 shares). Additionally, the remaining volume is also a concern. After this stock conversion, the remaining convertible shares for the 7th, 10th, 15th, and 16th series amount to 6,191,073 shares, which is 48.17% of the total.

Airoot is a company specializing in industrial printers. It changed its name from J. Stefan to the current name in March last year. The largest shareholder changed from J. Stefan No.1 Investment Association to Fortuna No.1 Private Equity Partnership. The current shareholding ratio is 13.06%. Fortuna No.1 Private Equity Partnership is a company whose largest shareholder is K&T Partners.

After the change of the largest shareholder, Airoot has pursued various new businesses. It engaged in the distribution of COVID-19 diagnostic kits and also operated a mask business. In addition, in May, it signed an investment contract with Virocure, a specialized anticancer virus company, which could become its largest shareholder in the future.

Furthermore, last month, Airoot incorporated Woojin Electric, an industrial power integrated platform company providing power equipment and solution engineering services to front industries such as semiconductors, displays, and renewable energy, as an affiliate.

However, its performance was sluggish. In the first quarter, it recorded sales of 8 billion KRW and an operating loss of 1.1 billion KRW. Compared to the same period last year, sales decreased by 28.64%, and operating losses continued.

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