Nano Chem Tech decided to sell its stake in Hanil Onyx to another affiliate just over a year after acquiring it. Amid worsening financial difficulties, it appears the company is relying on funds from its affiliates, raising concerns that hasty acquisitions of corporations have led to this situation.
Last year, Nano Chem Tech acquired Hanil Onyx, the number one company in the domestic commercial kitchen equipment market, and Canvas N (formerly Victents), a program production company.
According to the Korea Exchange on the 5th, Nano Chem Tech announced that it will sell 29,000 shares of Hanil Onyx to Canvas N after the market closed on the 4th. This involves transferring 29,000 shares of Hanil Onyx out of the 100,000 shares held by Nano Chem Tech for 4.8 billion won. The company stated that it decided to sell its equity to improve its financial structure and enhance operational efficiency.
By acquiring a company unrelated to its existing business and selling its equity to an affiliate in just one year, Nano Chem Tech's reckless expansion has come under scrutiny.
Nano Chem Tech acquired two companies, Hanil Onyx and Canvas N, last year. In January, it acquired approximately 29% of Hanil Onyx's equity for 16.5 billion won, and in November, it purchased 500,000 shares (15.9%) of Canvas N for 15 billion won, becoming the largest shareholder. The funds spent on the acquisition of the two corporations alone amount to 31.5 billion won.
The issue is that this investment was not made with surplus funds. Nano Chem Tech issued 19 billion won worth of Convertible Bonds (CB) in the 6th to 8th rounds to acquire Hanil Onyx and raised a total of 12 billion won through additional 9th to 12th rounds of CBs from July last year to January this year. It subsequently issued a total of 31 billion won worth of seven CBs from July 2023 over about a year and a half.
The 6th to 7th round CBs were all redeemed last year, but the remaining 18 billion won worth of CBs are in an unpaid state. The 8th round CBs became callable for put options from last month, and the exercise period for the put options of the 9th to 11th round CBs will come in the second half of this year.
The conversion price of the CBs is around 617 to 684 won. As of the 5th, Nano Chem Tech's stock price is 672 won, reflecting a 6% decline over the past month. As of the third quarter of last year, Nano Chem Tech had only 4.3 billion won in cash and cash-equivalents, necessitating additional funding to respond to the put options. This comprises a case of increased financial risk due to reckless investments unrelated to its main operations.
The actual owner of Nano Chem Tech, a developer of NANO new materials, is Chairman Lee Sang-kyu (holding 6.35% equity), with Trinity Equity (22.88%)—of which he holds a 100% stake—as the largest shareholder. The company's transactions were suspended in October 2021 after accounting irregularities by former management were discovered during the announcement of the semiannual financial statements for 2018 and 2019, but trading resumed in February 2023.
As of the third quarter of last year, Nano Chem Tech's liability ratio was 102.58%, sharply increasing from 71.56% at the end of 2023.
Since 2021, the company has also been recording operating losses. Last year (January to September), Nano Chem Tech reported revenue of 41.8 billion won (consolidated) and an operating loss of 800 million won. ChosunBiz reached out to Nano Chem Tech for inquiries regarding future funding plans and outlook, but could not establish contact.