Cenotec Cancels All Self-Held Convertible Bonds... "Enhancing Shareholder Value"

Cenotec has eliminated the potential overhang risk and enhanced shareholder value by canceling all of its self-held convertible bonds.

According to Cenotec on April 22, the convertible bonds that were canceled this time were those previously acquired through the exercise of early redemption rights. The company extinguished all bond rights, including conversion rights, through a complete cancellation process.

Cenotec's board of directors resolved to cancel its self-held convertible bonds on April 17, and completed the cancellation of the entire amount on April 20. In May 2021, the company issued the second tranche of convertible bonds worth a total of 17.5 billion won. Subsequently, following investors' exercise of early redemption rights, Cenotec repurchased a portion of these bonds. As a result, in April and October 2024, the company acquired 2.5 billion won and 2.4 billion won worth of bonds, respectively, before maturity, and held them as self-held convertible bonds totaling 4.9 billion won.

This cancellation is viewed as a preemptive measure to address potential equity dilution risk from conversion rights, thereby protecting the value of existing shareholders' equity and significantly contributing to the stability of earnings per share (EPS). Notably, it is expected to reduce concerns about overhang in the future and act as a factor that increases investment attractiveness.

A Cenotec representative stated, "The cancellation of convertible bonds is a measure aimed at strengthening our financial structure and preemptively eliminating factors that could undermine shareholder value. We will continue to pursue shareholder-friendly capital policies to further enhance corporate value."

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