This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:42 p.m. on Mar. 25, 2026.
Enchem, a corporations specializing in secondary-battery electrolytes, succeeded in obtaining an "unqualified" audit opinion for last year's audit report. Enchem had faced concerns among investors that it might fail to receive an audit opinion as the submission of the audit report was delayed.
However, it was deemed to have uncertainty regarding its status as a going concern due to an excessive amount of short-term liability. As a result, following the forced sale by margin call of shares held by Chief Executive Officer Oh Jeong-gang, the largest shareholder, during the recent audit report delay, Enchem is expected to face rising funding risks. About 230 billion won worth of convertible bonds (CB) will become eligible for early redemption requests within the year.
According to investment banks (IB) and the Financial Supervisory Service's electronic disclosure system on the 25th, Enchem disclosed that it received an unqualified opinion from Samil Accounting Corporation, which conducted last year's audit. However, the report included a note raising concerns about uncertainty over its continuation as a going concern.
Enchem announced that submission of the audit report scheduled for the 24th would be delayed, sending the share price swinging. As audit report delays have often led to disclaimers of opinion, investors' funds flowed out. Enchem shares closed at 29,950 won, down 29.94% from the previous day's close of 42,750 won. Considering that the stock hit a peak of about 400,000 won in Apr. 2024, the price has fallen to less than one-tenth in about two years.
The audit report that triggered the lower-limit plunge was released on the 25th with an "unqualified" opinion, sending the stock to the upper limit again, but uncertainty over its going-concern status remains. Going-concern uncertainty means that, given Enchem's current financial condition, continued operations are difficult.
Samil Accounting Corporation, the auditor, said in the audit report, "The company recorded an operating loss of 32,387 million won and a net loss of 12,905 million won for the current period, and current liabilities exceed current assets by 168,648 million won," adding, "This may raise substantial doubt about the company's ability to continue as a going concern in terms of short-term liquidity."
In fact, Enchem appears likely to face a situation this year in which it must repay debt amounting to hundreds of billions of won. That is because the put option (early redemption right) for the 14th tranche of convertible bonds (CB) issued in 2024 comes due at the end of this year. The remaining balance of the 14th CB stands at 238.1 billion won, and if the share price stays where it is, early redemption will likely be requested for most of the amount.
The problem is that, given Enchem's current cash position, its repayment capacity is insufficient. As of the end of last year, Enchem's cash and cash equivalents were only 1.1 billion won, and total current assets were around 30 billion won. Since the CB was issued through a public offering, it is also difficult to negotiate with bondholders to delay exercising the put option. This CB is listed as an on-exchange bond and plunged on the 24th, dropping to 5,003 won, half of face value. That reflects investors' low expectations for principal repayment.
Considering the CB issuance terms at the time, conversion into stock is virtually off the table. With a 1% coupon rate and 3% yield to maturity, the interest rate is low, and the conversion price is fixed at 112,700 won, more than twice the current share price.
From Enchem's standpoint, separate financing is necessary, but with going-concern uncertainty noted in this year's audit report, issuing CBs or conducting a paid-in capital increase will not be easy. Attracting investment from a third party is an option, but with the largest shareholder's equity ratio reduced by margin-call sales, there are concerns about defending management control.
This is because most of the equity that Chief Executive Officer Oh, the former largest shareholder, had pledged as loan collateral was sold off through margin calls after the lower-limit plunge, sharply reducing the equity ratio. Until recently, Oh borrowed 93.3 billion won by pledging all 2,379,413 shares of Enchem he owned as collateral. About 1.6 million of those shares were disposed of through enforcement of collateral rights.
Enchem says that there is no immediate impact on control, as Wyatt Group, Chief Executive Officer Oh's private company and the No. 2 shareholder, has taken over as the largest shareholder. An Enchem official said, "Chief Executive Officer Oh has long sought to increase equity to strengthen management control," but added, "It is true that the equity ratio fell due to margin-call sales, yet there is no issue with control, so we are not planning any particular follow-up measures for now."
However, industry watchers worry that a low largest-shareholder equity ratio could become a tool for a future management-control challenge. A source in the capital markets industry said, "Receiving investment from friendly parties appears to be the only way to resolve the current financial condition," adding, "If the liability issue is not resolved, it will be hard to be confident about next year's audit opinion."