This article was displayed on the ChosunBiz MoneyMove (MM) website at 11:23 a.m. on Aug. 10, 2026.
As the secondary battery electrolyte manufacturer Enchem(348370) moves to scrap the early redemption right (put option) on its roughly 238 billion won in convertible bonds (CBs) and effectively delay repayment by three years, creditors are facing a more complicated calculus. Enchem proposed pledging equity in key overseas subsidiaries as collateral and raising yields, but some creditors are voicing concerns about the collateral value Enchem presents, the likelihood of a recovery in results, and fairness.
According to the investment banking (IB) industry on the 10th, Enchem plans to hold a meeting of the 14th public offering CB bondholders on the 27th to vote on whether to delete the put option. The 14th CB was issued in Nov. 2024 in the amount of 250 billion won, and the current outstanding balance is about 238.2 billion won. Creditors were originally able to demand early redemption starting on Nov. 29, but if the amendment passes, that right will disappear and the repayment date will be pushed back to Nov. 2029.
In return for asking creditors to wait three more years, Enchem offered collateral and additional returns. The amendment includes granting a first-priority pledge on 49% of Enchem America's equity and 100% of the equity in the Poland and Hungary subsidiaries, and a second-priority pledge on the remaining 51% of Enchem America. It also proposed adding 1,500 won per 10,000 won face value to the existing maturity redemption amount, raising the yield to maturity based on the initial issue price from the previous 3% per year to the mid-5% range per year.
On this point, the first question creditors raise is whether the collateral value Enchem offers is sufficient. Enchem said that external evaluator Samdo Accounting Corporation assessed the value of Enchem America's equity at $400 million (596.9 billion won). That equity value assumes a merger with Nasdaq-listed TheGrowHub. Applying this assessment as is, the 49% equity offered as first-priority collateral to the 14th CB creditors would be worth about 292.5 billion won, exceeding the outstanding principal.
However, a company value calculated on the premise of a merger and the value a collateral holder can actually recover in a default are different concepts. Enchem America's net worth at the end of the first quarter this year is only 135.6 billion won. The book value of the 100% equity in Enchem America owned by Enchem is 138.5 billion won. Both are short of 70 billion won based on the 49% first-priority collateral equity.
As a result, creditors are reportedly calling for a separate reassessment of the collateral value of Enchem America. They say an evaluation is needed that assumes an actual collateral enforcement scenario, not a company value calculated for a merger.
Another issue is whether the three years Enchem seeks will actually lead to a recovery in results. Recent results at the U.S. subsidiary, which Enchem touts as the core of future financing, are not good. Enchem America's revenue last year was 164 billion won, down about 26% from 223.1 billion won in 2024. During the same period, net income swung from 32.6 billion won to a net loss of 3.1 billion won, and plant utilization is also said to be low.
The parent, Enchem, is also still far from generating normal operating cash flow. Last year's consolidation revenue was 312.8 billion won, down from 365.7 billion won a year earlier, and the operating loss widened from 50.4 billion won to 78.4 billion won. In the first quarter this year, it posted an operating loss of 24.2 billion won, and when current liabilities exceeded current assets by 223.6 billion won, the auditor said, "There could be substantial doubt about the company's ability to continue as a going concern from a short-term liquidity standpoint."
Enchem is pinning its hopes on the U.S. subsidiary's Nasdaq listing as a breakthrough. If the merger for a backdoor listing is completed, Enchem is expected to secure at least 85% of TheGrowHub's equity. That would establish a base for new fundraising. But the deal is not yet complete. TheGrowHub previously received a delisting decision from Nasdaq for failing to meet the minimum price and shareholders' equity requirements. Recently, a Nasdaq hearings panel allowed it to maintain its listing on the condition it meets new listing requirements by Dec. 2, but Enchem is expected to receive the cash it anticipates only if the merger closes and new funding is actually raised.
Fairness among creditors is also being raised. While repayment of principal to 14th CB creditors would be delayed by three years, Enchem's other debts could be repaid or refinanced under existing contracts. As of the end of the first quarter this year on a consolidation basis, Enchem had about 151.2 billion won in short-term borrowings maturing within one year. Apart from the 14th CB, the face value balance of other outstanding CBs is about 37.8 billion won.
In particular, the loan of about 11.8 billion won that Enchem borrowed from Coreline Invest with Joongang Advanced Materials shares as collateral matures on Nov. 30, the day after the original put option exercise date for the 14th CB. Also, for the newly issued 15th CB (18.7 billion won), 16th CB (7.5 billion won), and 17th CB (3 billion won) this year, there have been no changes so far to the put option terms. Creditors of the 15th CB can demand early redemption starting Jan. 5 next year, and creditors of the 16th and 17th CBs can do so from the end of the same month. But if 14th CB creditors accept the amendment, they could end up having invested earlier yet still have to wait until 2029.
This is why some investors in the 14th CB are asking, "Why are only we the ones who have to wait three years?" The 14th CB creditors would be postponing repayment and helping the company avoid a liquidity crisis, while in the meantime other financial institutions or investors in other CB tranches could be paid under existing contracts.
That said, an industry expert assessed that if the amendment does not pass, the company could effectively slip into a default state. A source in the IB industry said, "The amendment ultimately comes down to whether to call a default and recover principal, or recover without doing so," adding, "If the amendment passes, the key will be whether Enchem's operations revive."