RFTech's Merger with EcoVolt Raises Concerns of Massive Share Dilution and Deteriorating Financial Health, Harming Shareholder Value

RFTech is merging with EcoVolt by issuing 4,111,636 new shares, resulting in approximately 45% dilution of existing shares. The merger ratio of 1:0.2027268 is unfavorable to EcoVolt shareholders but limits dilution for RFTech.
Prior third-party allotments issued 8.86 million and 4.29 million shares at 1,693 won and 1,631 won per share respectively, raising about 22 billion won at a deep discount to the current price of 7,270 won, significantly diluting existing shareholder value.
RFTech's consolidated 2025 operating loss was 25.2 billion won and net loss 30.5 billion won, with a high debt ratio of 119% and a very low credit rating of B-. In contrast, EcoVolt has a low debt ratio of 17% but low operating margins.
The combined entity is expected to continue operating losses, with R&D spending at only 3.9% of revenue and 72% of sales concentrated on Samsung Electronics, posing customer concentration risk.
There have been no share buybacks and no dividends for the past three years. The merger agreement includes a condition that if share purchase requests exceed 150 billion won, the merger may be canceled.
[AI Summary]The massive share dilution from the merger, weak financial performance, and low credit rating negatively impact shareholder value. The low-price private placements and persistent operating losses make the short-term stock outlook uncertain, and the risk of delisting remains post-merger, warranting cautious investment.