Enchem, a battery materials company, completed the sale of its 11th and 13th series convertible bonds on the 24th, receiving 97,767 shares of unlisted company Wisdom instead of cash as payment. The transaction, valued at approximately 7.8 billion won based on conversion price, concluded nearly six months after the sale process began. The company accepted equity in an unrelated business rather than cash despite holding only 7.3 billion won in cash assets as of Q1 and facing a 242 billion won operating loss for the quarter.
Enchem Receives Wisdom Shares for 7.8 Billion Won CB Sale
According to the Financial Supervisory Service's electronic disclosure system on the 28th, Enchem finalized the sale of its 11th and 13th series convertible bonds and acquired 97,767 shares of unlisted company Wisdom as payment. The share value was calculated at 76,172 won per share, totaling approximately 7.8 billion won. Enchem and Wisdom have no existing equity relationship.
The CBs sold were originally issued in 2023. The 11th series totaled 31.5 billion won, while the 13th series amounted to 50 billion won. Truststone Asset Management, Cha Partners Asset Management, and Astra Asset Management were among the initial subscribers.
Enchem exercised call options to repurchase these CBs starting in 2024. Most of the originally issued volume has since been converted to common stock or repurchased by Enchem. The company planned to resell some repurchased CBs to GMI Venture's (formerly Plutos Investment) fund 'Golden Value No. 5'.
Of the 7.8 billion won transaction value, Enchem secured only approximately 400 million won in cash—a down payment received at the end of last year. The remaining balance was paid in Wisdom shares. GMI Venture also paid 86,898 won in cash for fractional shares.
Company Holds 7.3 Billion Won Cash Amid 242 Billion Won Operating Loss
Enchem's financial situation reveals limited flexibility for accepting non-cash payments. The company's cash assets stood at approximately 7.3 billion won as of Q1. With a Q1 operating loss reaching 242 billion won, immediate cash asset acquisition appears necessary.
Short-term liquidity pressure is mounting. Enchem's current liabilities (debt due within one year) exceed current assets (assets convertible to cash within one year), resulting in a current ratio of 61.9%. The current ratio, calculated as current assets divided by current liabilities, indicates greater liquidity pressure when below 100%. Last year's audit report raised concerns about uncertainty regarding the company's ability to continue as a going concern due to the low current ratio.
Enchem changed its stated purpose for the CB sale from 'securing operating funds' to 'asset portfolio adjustment and strategic alliance' after the payment method shifted. However, given that Wisdom's core business involves operating corporate commuter buses, expected synergies appear limited.
CEO Oh Jung-kang Lost Majority Stake Through Forced Selling
Some industry observers interpret Enchem's acceptance of unlisted shares as part of efforts by former largest shareholder CEO Oh Jung-kang to secure friendly shareholders. Oh lost a 9.01% stake to forced selling earlier this year when Enchem's stock price declined following delayed audit report publication.
The forced sale transferred the largest shareholder position to Wyatt Group, Oh's personal company. The combined stake of Oh and Wyatt Group stands at only 9.39%, raising concerns about weakened control.
Wisdom Previously Linked to 2019 Lime Fund Scandal
Wisdom's name appeared in the 2019 Lime fund scandal. DA Technology, a key entity in the Lime case, acquired Wisdom, and evidence emerged suggesting Wisdom was used for fund circulation, with proceeds from Wisdom's sale flowing back to DA Technology. During this process, Wisdom received a corporate valuation of approximately 120 billion won, which some considered excessively high relative to its performance.
Wisdom's current market value is reported at approximately 300 billion won—about 18% higher than the valuation recognized in the transaction between Enchem and GMI Venture.
Enchem did not respond to multiple contact attempts regarding why it accepted Wisdom shares instead of cash. A GMI Venture representative stated, 'There is nothing particular we can comment on.'
FAQ
What did Enchem receive for selling its convertible bonds on the 24th?
Enchem received 97,767 shares of unlisted company Wisdom valued at approximately 7.8 billion won instead of cash. The company secured only about 400 million won in cash as a down payment received at the end of last year, with the remaining balance paid in Wisdom equity.
Why did Enchem accept shares instead of cash for the CB sale?
The source does not provide an explicit explanation for why payment terms changed from cash to equity. Enchem did not respond to contact attempts seeking clarification. The company changed its stated sale purpose from 'securing operating funds' to 'asset portfolio adjustment and strategic alliance' after the payment method shifted.
What is Enchem's current financial position as of Q1?
Enchem held approximately 7.3 billion won in cash assets as of Q1, while recording a 242 billion won operating loss for the quarter. The company's current ratio stands at 61.9%, indicating that current liabilities exceed current assets.
