 |
Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Seoul, September 26 – KCC Corp. is facing shareholder discontent after announcing plans to issue exchangeable bonds (EBs) backed by its treasury shares, at a time when the government is moving ahead with the third amendment to the Commercial Act, which emphasizes the cancellation of treasury stock.
KCC shares closed at KRW 357,000 on the 26th, down KRW 6,000 (1.65%) from the previous session, marking six consecutive trading days of decline.
The company’s stock had been stagnant for years due to weakness in its silicone business but surged about 41% under the Lee Jae-myung administration. On September 15, KCC shares hit an intraday high of KRW 441,000, the highest in 52 weeks, just short of the previous peak of KRW 477,000.
However, profit-taking began to appear, and on September 24, ahead of market opening, KCC disclosed that it would issue EBs in the fourth quarter using 882,300 shares (9.9% of total shares) from its treasury stock. The company added that it would cancel 350,000 shares (3.9%) and contribute another 300,000 shares (3.4%) to the employee welfare fund.
Investors, who had expected a full cancellation of treasury shares in line with government policy, reacted negatively to the announcement that most treasury shares would be used for EB issuance instead. On the day of the disclosure, KCC shares briefly plunged by nearly 17% during intraday trading.
EBs are often perceived as a bearish factor because, unlike convertible bonds (CBs) or bonds with warrants (BWs), they typically have shorter exercise periods, raising the risk of a large influx of shares into the market.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
