Pino, a KOSDAQ-listed company specializing in battery materials, is moving forward with plans to issue 40 million redeemable convertible preferred shares (RCPS) through a private placement. The issuance is expected to raise approximately 350 billion won. Pino's largest shareholder is the Chinese precursor company CNGR. Analysts suggest that this RCPS issuance aims to secure funding for entry into the U.S. market while simultaneously navigating U.S. regulations concerning Chinese capital.
According to financial investment industry sources, Pino is in the process of issuing 40 million RCPS through a private placement. The issuance price per share will be determined later, but based on the previous day's closing price of 8,870 won, the total amount would be around 354.8 billion won. The shares will have a 10-year duration and a preferred dividend rate of 2%. Conversion to common stock will be possible after 12 months, and redemption can occur after 36 months.
Investment banking experts are paying close attention to the conditions related to the largest shareholder's stake in the RCPS issuance. Pino has granted tag-along rights, allowing investors to participate in any sale of shares by the largest shareholder under the same conditions. However, there is an exception for cases where the largest shareholder sells a portion of their stake to meet Non-PFE requirements.
This exception is seen as a reflection of Pino's governance structure. Pino, which was listed on the KOSDAQ in 2001, will be integrated into the CNGR group, the world's leading precursor company, in 2024. As of June this year, the largest shareholder, Zoomwe Hong Kong New Energy Technology, holds 25.62%, while another CNGR affiliate, CNGR Hong Kong Hongchuang New Energy, owns 11.09%. Together, these companies control 36.71% of Pino.
Pino is actively pursuing entry into the U.S. supply chain for battery materials, which necessitates diluting the stake of its Chinese majority shareholder. Last year, the U.S. strengthened regulations related to prohibited foreign entities (PFE) in advanced manufacturing sectors, including batteries, through the Inflation Reduction Act (OBBBA). This legislation reduces tax credits and subsidies for foreign companies with significant ownership from hostile nations like China. For Pino, the RCPS issuance represents a multifaceted strategy to attract substantial external funding while lowering the stake of its Chinese majority shareholder.
In line with this strategy, Pino has also been securing domestic production bases to facilitate entry into the U.S. supply chain. The company increased its stake in C&P, a joint venture established with POSCO Future M, from 29% to 75% to secure a local lithium iron phosphate (LFP) production base, which is crucial for its U.S. supply chain strategy.
Pino is also strengthening capital exchanges with domestic battery companies. In April, the company transferred a 7.35% stake (6,126,200 shares) to Samsung SDI through a third-party allocation of new shares. In August, Pino decided to conduct a third-party allocation of new shares worth 15 billion won to Cosmo Advanced Materials.
Pino's proactive measures have led to significant improvements in its financial performance. After rebranding from Sky Moon Technology in 2024, the company has shifted its focus from telecommunications equipment to battery materials, including precursors, as its core business. According to its semi-annual report, Pino's revenue for the first half of this year reached 213.5 billion won, a 109% increase compared to the same period last year, while operating profit surged to 11.79 billion won, a 1626% increase. The company also turned a net loss of 3.65 billion won last year into a profit of 7.13 billion won this year.
A Pino representative stated, "It is difficult to comment on the RCPS issuance due to internal circumstances."
* This article has been translated by AI.
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