Jungang Advanced Materials, Resolution of CB Overhang and Fundamental Improvement... "Expect Early Exit from Investment Alert Status"

Jungang Advanced Materials resolved overhang concerns through an agreement with CB investors to extend the conversion period. This agreement is expected to mark an improvement in fundamentals. Jungang Advanced Materials has been continuously securing orders in the secondary battery business recently, raising expectations for a swift exit from the investment caution list.

Jungang Advanced Materials announced on the 6th that it has agreed with investors to extend the conversion period of the 11th series convertible bonds (CB) by one year. This has alleviated concerns about overhang (potential large-scale sell-off) due to the exercise of conversion rights for the 11th series CB.

In October last year, Jungang Advanced Materials issued the 11th series CB worth 2.6 billion KRW (5.2 million shares) to secure operating funds such as raw material purchases. The conversion request period for this CB was originally set to start on the 25th of this month but has been deferred until October next year through negotiations with bondholders.

Additionally, Jungang Advanced Materials is rapidly achieving results in the secondary battery new business. Through ‘EDIEL’, it plans to operate a lithium salt manufacturing facility in Saemangeum and is actively expanding its lithium salt distribution business. Until last month, Jungang Advanced Materials signed a lithium salt supply contract worth 16.5 billion KRW with the global electrolyte company ‘Enchem’. The order volume is expected to increase significantly in the future.

Meanwhile, in August, Jungang Advanced Materials was designated as an investment caution stock due to capital erosion caused by net losses. The company explained that if profitability improves in the lithium salt distribution business in the second half of this year and a smooth agreement is reached with bondholders, a swift exit from the investment caution list is also possible.

A Jungang Advanced Materials official stated, “There were concerns about the release of the 11th series CB volume because some of the 10th series CB had been converted into common shares, affecting the stock price,” adding, “By proactively extending the conversion period with bondholders, there will be no overhang issue.”

He continued, “Since the strategic investors who agreed were those who highly valued Jungang Advanced Materials’ future growth potential as an advanced secondary battery materials company, persuasion was possible,” emphasizing, “We will maximize the company’s value through significant performance improvements in the secondary battery new business.”

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