Exchangeable Bond Exercise at Discount to Market: Treasury Shares Delivery Increases Outstanding Shares, Posing Overhang Risk
Exercise details: On May 29, 2026, KRW 6 billion of the 1st series exchangeable bonds (total face value KRW 21 billion) were exchanged for 857,142 treasury shares at an exchange price of KRW 7,000 per share.
Since treasury shares are used, no new shares are issued. However, outstanding shares increase by 857,142, representing 1.96% of the total 43,692,624 shares.
Current market price (KRW 9,460) is 26% above the exchange price (KRW 7,000), providing immediate profit for bondholders. This creates potential selling pressure on the stock.
The remaining EB balance of KRW 11 billion (exchangeable into 1,571,430 shares, ~3.6% of total) poses additional overhang risk if converted.
This exercise follows the treasury share disposal decision (Jan 28, 2026). Financial impact is limited but raises shareholder dilution concerns.