KOSDAQ-listed WiTS has become entangled in a cross-shareholding relationship by acquiring redeemable convertible preferred shares (RCPS) of its parent company Chemtronics. With Chemtronics as the largest shareholder of WiTS and WiTS now securing equity in its parent, the two companies' stakes are now interlocked.
WiTS was established in 2019 after Chemtronics acquired the wireless charging business unit of Samsung Electro-Mechanics. Currently, Chemtronics is led by President Kim Eung-su, the eldest son of Chairman Kim Bo-gyun, while WiTS is led by President Kim Eung-tae, the second son, maintaining either a de facto split of the group or a cooperative management structure.
On the 10th, WiTS said it agreed to acquire roughly 430,000 shares of Chemtronics held by the "Axis Jump New Technology Investment Association" at 22,800 won per share. Chemtronics designated its subsidiary WiTS as the call option (put right) exerciser for the RCPS.
To that end, WiTS plans to deploy 10 billion won from its cash on hand. Chemtronics' share price moved around 30,000–34,000 won in Jan.–Feb. this year, then fell to around 26,000 won right after the U.S. strike on Iran.
The RCPS was issued three years ago by Chemtronics in the amount of 30 billion won to raise facility and operating funds, with an issue price at the time of 20,896 won per share. Chemtronics designated WiTS as the call option exerciser for 30% of the tranche. In return for the call option designation, WiTS agreed to pay Chemtronics 4,204 won per share, totaling 1.8 billion won.
What investors are focusing on is that, if the RCPS is converted into common stock, WiTS would secure 2.57% equity in parent company Chemtronics. The market views this equity acquisition as a move to use the cash of the listed subsidiary WiTS to backstop the parent Chemtronics' financial structure while, under the brothers' management system, shoring up control among affiliates.
The largest shareholder of WiTS is Chemtronics, which holds 49.2% equity. Presidents Kim Eung-su and Kim Eung-tae each also hold 5.89% equity in WiTS. Including related parties, the largest shareholders' equity ratio in WiTS reaches 62.97%.
At Chemtronics, the family of Chairman Kim Bo-gyun holds 24.49% equity as the largest shareholder group. Chairman Kim Bo-gyun holds 11.83%, and President Kim Eung-su and President Kim Eung-tae, the eldest and second sons, hold 4.01% and 3.85%, respectively.
The company said it was a decision "to secure realized gains from converting RCPS into common stock and to create business synergies among affiliates."