This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:54 p.m. on Jul. 19, 2026.
KOSDAQ-listed Enchem(348370) is pushing a reverse triangular merger between its subsidiary "Enchem America" and Merger Sub, Inc., a newly established subsidiary of Nasdaq-listed THE GROWHUB LIMITED (The GrowHub). Enchem America will merge with Merger Sub, and in return Enchem will acquire new shares of The GrowHub to become the largest shareholder. Enchem, which has struggled to raise funds, expects this merger to secure a funding channel in the United States.
However, The GrowHub must maintain its listing for the plan to go through. The GrowHub currently faces grounds for delisting and has filed an appeal with a Nasdaq hearings panel. It has addressed some delisting grounds through a reverse stock split and a subsidiary merger, but expectations for the merger remain cautious.
According to the capital market industry on the 19th, The GrowHub was notified of delisting by Nasdaq last month. It triggered the "trading below $1 for 30 consecutive trading days" condition, equivalent to Korea's penny stock criteria. Earlier in May, it also received a deficiency notice for failing to meet shareholder equity (net assets) requirements.
The GrowHub is a Singapore company that tracks agricultural supply chains based on Blockchain. It listed on Nasdaq in Aug. last year. Its share price rose to as high as $4.25 right after listing, but then steadily fell and stayed under $1, leading it to be classified as a "penny stock."
The GrowHub is pursuing a reverse triangular merger with Enchem, a domestic electrolyte producer. In this reverse triangular merger, a subsidiary to be established by The GrowHub will be merged into Enchem America, and in return Enchem will secure equity in The GrowHub. In effect, it is a backdoor listing of Enchem America on Nasdaq. The portion of The GrowHub equity that Enchem will secure will be determined by the closing share price, with a minimum stake of 85% under the contract terms.
The issue is that The GrowHub faces a delisting crisis. The GrowHub is at risk of delisting on both performance and share price. In addition to trading below $1, it falls short of the initial listing requirements for shareholder equity (net assets), market capitalization, and income before income taxes. In particular, shareholder equity does not meet the minimum $2.5 million (about 3.78 billion won) required to maintain a Nasdaq listing.
The GrowHub believes it can meet the listing maintenance requirements on the premise of this merger. A source in the investment banking (IB) industry said, "Under Nasdaq listing rules, the likelihood of maintaining a listing is high if even one of the requirements for shareholder equity, market capitalization, or pre-tax income is met," adding, "But it is unclear how Nasdaq will view whether the merger can be completed to the end."
The merger must also clear the U.S. Securities and Exchange Commission (SEC). Under Rule 145a, established in 2024, backdoor listings via shell companies require SEC approval. The SEC's decision is expected to be the key factor in whether the merger succeeds.
A concern is that Enchem America's plant utilization rate is reportedly not high. Analysts say the key will be whether it is operating as a normally functioning company.
The merger is also quite important for Enchem. Enchem is currently burdened with excessive liability and received a going-concern uncertainty opinion in last year's audit report. Even the size of convertible bonds (CBs) with put options exercisable this year amounts to 238.1 billion won, while cash on hand as of the first quarter is about 7 billion won, nearing the bottom.
If the merger succeeds, Enchem is expected to secure a new funding channel in the U.S. market. As Enchem's financial risk has grown and domestic funding options are limited, an overseas funding channel is crucial.
An IB industry source said, "Given the much larger U.S. capital market, there are certainly expectations that Enchem could raise several hundred billion won at once," adding, "But conversely, if this merger fails, the impact on future business operations would be very large. Investors should be cautious in their decisions."