Investors who purchased exchangeable bonds (EB) issued by ABOV Semiconductor(102120), a semiconductor back-end processing company listed on KOSDAQ, have successively exercised their early redemption rights (put options). Despite a super boom in semiconductors, the continued slump in the share price appears to have prompted them to recover at least their principal.
On the 18th, according to ABOV Semiconductor, some holders of the EB the company issued in 2024 exercised put options. Two years ago, the company issued 10 billion won each of second-round EBs, with the company's treasury shares as the exchange underlying, and third-round EBs, with shares of its subsidiary WINPAC(097800) as the exchange underlying. Of these, put options were exercised on 4 billion won of the second-round EB and 8 billion won of the third-round EB.
The company plans to use its cash on hand to buy the EBs over the counter and cancel them. At the time, many domestic asset managers operating KOSDAQ funds purchased the EBs.
Investors who exercised the put options got back only their principal after two years of investing. That is because the interest rate applied to early redemption when the EBs were issued was set at 0%. Even without investment returns, investors are exercising put options apparently due to the prolonged weakness in the share price.
At the time of the EB issuance, the share prices of ABOV Semiconductor and WINPAC were around 12,000 won and 2,000 won, respectively. Accordingly, the EB exchange prices were set at 15,453 won and 2,093 won.
Since then, however, the share prices of both companies failed to exceed the exchange prices and instead fell. As of the 14th, ABOV Semiconductor's share price was 8,280 won, and WINPAC(097800)'s was 2,265 won. In WINPAC's case, it consolidated common shares at 5-for-1 (500 won→2,500 won) in April, adjusting the exchange price to 10,465 won, but the share price fell further, reducing the incentive to exchange the EB for stock.
EBs can yield investment returns only when they are converted into stock at a lower exchange price and then sold by applying a higher market price, but the decline in share prices has left EB investors unable to make a profit.
ABOV Semiconductor, a company specializing in non-memory semiconductors, has steadily innovated technology and expanded its business in microcontroller units (MCUs), which serve as the brains of electronic devices, and sensors. It is also regarded as a company with solid financial soundness. While sales have steadily grown, it returned to the black in operating profit last year.
In particular, ABOV Semiconductor expanded its business scope by acquiring an equity stake in WINPAC, a semiconductor back-end specialist, in 2021. WINPAC has closely collaborated with SK hynix(000660) since its early days. ABOV Semiconductor is the largest shareholder with 46.8% of WINPAC's equity, and ABOV Semiconductor CEO Choi Won also holds 0.26% of WINPAC's equity.
However, amid intensifying competition in the global MCU market and continued weak results at subsidiary WINPAC, the share price has been slow to rebound.