Samyoung M-Tech Accelerates Fundraising for Donga Hwasung Acquisition with Treasury Share Sale and Issuance of BW and CB

The acquisition of Donga Hwasung by Samyoung M-Tech has passed a major hurdle. The company has secured the necessary funds for the down payment by selling treasury shares and issuing both bonds with warrants (BW) and convertible bonds (CB).

According to the Financial Supervisory Service's electronic disclosure system DART on November 20, Samyoung M-Tech made three disclosures the previous day regarding the sale of treasury shares and the issuance of BW and CB.

First, Samyoung M-Tech will sell 870,000 treasury shares through after-hours block trading at 15,637 won per share. The total proceeds from the sale amount to 13.6 billion won. In addition, the company issued CBs worth 4.7 billion won and BWs worth 9 billion won. The conversion and exercise prices for both the CBs and BWs are set at 18,760 won, with coupon and maturity interest rates of 0% and 1%, respectively. Given the low interest rates, the investment appears to be made with a view to eventual stock conversion. Through these measures, Samyoung M-Tech raised a total of 27.3 billion won.

By raising 27 billion won in this way, Samyoung M-Tech is believed to have secured the funds needed for the down payment on the Donga Hwasung acquisition. Previously, Samyoung M-Tech invested 15 billion won to establish Samyoung Partners. The company then acquired the right to purchase Donga Hwasung, which it previously held. Samyoung M-Tech had agreed to acquire 6,664,802 shares (42.18%) of Donga Hwasung owned by Lim Kyung-sik and two others for 133.29604 billion won.

To date, Samyoung M-Tech has secured a total of 92.3 billion won, including 40 billion won of its own funds, 27.3 billion won from the sale of treasury shares and mezzanine issuance, and 25 billion won from corporate bonds issued to Lim Kyung-sik, CEO of Donga Hwasung. With the funds secured so far, the company is expected to have no issues with making the down payment. The payment schedule for the Donga Hwasung acquisition consists of a contract deposit of 13.3 billion won, an interim payment of 53.3 billion won, and a balance payment of 66.6 billion won. The interim payment is scheduled for December 4.

It is also expected that there will be no difficulties in raising the remaining funds. A source involved in the mezzanine issuance explained, "Samyoung M-Tech plans to cover the remaining balance through methods such as issuing corporate bonds and bank loans."

Once the acquisition is complete, significant synergy is expected between Samyoung M-Tech and Donga Hwasung. Previously, KB Securities analyzed that Samyoung M-Tech is expected to undergo a corporate value re-evaluation as a result of the Donga Hwasung acquisition.

Im Sang-guk, a researcher at KB Securities, stated, "It is a time when a significant increase in performance is expected, centered on shipbuilding and mining plant equipment," adding, "Donga Hwasung is evaluated as a company with excellent growth potential and stability, as it is generating solid cash flow through eight overseas subsidiaries (in India, the United States, Vietnam, etc.) that focus on special rubber products for automobiles and home appliances."

He further emphasized, "The combination of Samyoung M-Tech's nuclear and wind power plant equipment with Donga Hwasung's hydrogen fuel cells (Donga Fuel Cell), battery gaskets for electric and hydrogen vehicles, and intake and exhaust hoses presents an attractive opportunity to build a future growth value chain through a mix of eco-friendly energy and mobility items."

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