CNPLUS(115530) said on the 31st that it will convert the entire 1.5 billion won of the 6th convertible bonds (CB) held by its largest shareholder, Ins&Co, into shares.
Exercising conversion rights is the process by which a bondholder converts the CB held into shares instead of receiving principal and interest from the company. The resulting issuance of new shares turns a liability the company would have had to repay into capital, improving its financial structure.
The conversion price is 2,150 won per share, about 17% higher than the recent one-month average share price of 1,836 won and about 9% higher than the previous day's closing price of 1,970 won. This conversion will issue 697,674 new shares. After the conversion, the total number of shares outstanding will increase to 8,582,055.
Ins&Co's equity stake will be 28.42% after the conversion. Including the holdings of related party Chief Executive Jeong Sang-ok, the largest shareholder group's equity stake is 30.71%.
CNPLUS is expected to see reduced uncertainty as the potential sellable CB volume held by the largest shareholder is fixed as shares through this conversion. Given that the conversion rights were exercised at a price higher than the current share price, the decision is being interpreted as focusing on fixing equity rather than short-term trading gains. As the 1.5 billion won in convertible bonds is incorporated into capital, liabilities will decline and shareholders' equity will increase, likely lowering the debt ratio.
The decision also aligns with market changes that tighten listing maintenance requirements. Recently, the financial authorities raised the market capitalization threshold among KOSDAQ delisting criteria to 20 billion won starting this month. In Jan. next year, it will be further raised to 30 billion won.
CNPLUS plans to use the stock conversion of the convertible bonds as a springboard to improve its financial structure while pursuing new businesses such as modular artificial intelligence data centers (AIDC), renewable energy, and automotive electronics. Earlier, it signed an agreement with Chonnam National University for the modular AIDC business.
A CNPLUS official said, "The largest shareholder's decision to request CB conversion reflects confidence in future growth potential and a philosophy of responsible management," adding, "With financial uncertainty resolved, we will do our best to enhance competitiveness and improve corporate value and shareholder value based on a strengthened financial structure."