Sung Ho Electronics, once seen as a beneficiary of artificial intelligence due to its acquisition of a U.S. Nvidia partner, is now grappling with the consequences of aggressive mergers and acquisitions (M&A). The company's financial structure has deteriorated due to excessive funding, leading to a sharp decline in its stock price. In response, the largest shareholder has begun using their holdings as collateral and is planning a large issuance of convertible bonds (CB).
According to financial industry sources, Sung Ho Electronics has recently selected NH Investment & Securities and Kiwoom Securities as underwriters for a private placement of 100 billion won in convertible bonds. There are growing concerns in the market regarding the purpose of this significant fundraising, with some suggesting it may be aimed at supporting the largest shareholder, Seoryong Electronics, which is facing a financial crisis rather than securing growth resources for the company.
The situation worsened in July, as the stock price continued to fall, dropping to around 11,850 won by the end of the month. This decline triggered a clause that could lead to forced selling if collateral is not supplemented within three trading days, putting Seoryong Electronics at risk of losing its management rights, with its stake potentially shrinking from 38.18% to 0.05%.
In response to the declining stock price, Seoryong Electronics has gradually repaid a total of 135 billion won in cash in five installments between July 8 and July 31.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.