S.Korea’s EcoPro BM seeks to raise $385 mn through convertible bond sale

South Korea’s leading battery materials maker EcoPro BM Co. sought to raise up to 500 billion won ($385 million) through a convertible bond for capacity expansions in line with ramped-up demand from the global electric vehicle industry.

EcoPro BM, the country’s top cathode manufacturer, has been sending a request for proposal (RFP) for the fundraising to medium- and large-sized private equity firms, as well as asset management companies since around April 5, banking industry sources said on Thursday.

The company plans to sell the CB at its recent stock prices with a premium of up to 15%, according to the sources. The bond’s coupon rate and yield to maturity (YTM) are both 0% while the company is set to guarantee only the principal.

Those conditions caused some potential buyers of the CB to balk at investing in the bond, especially as the recent surge in its share prices raised concerns over valuations. EcoPro BM’s share price ended the day at 268,500 won, about triple the 92,100 won level at end-2022.

HI Investment & Securities Co. and Kyobo Securities Co. on Wednesday lowered their recommendations to hold the stock, noting that current stock prices already reflected earnings for 2027 to 2030.

“A key to the (CB) deal’s success will be how EcoPro BM’s share price moves during the fundraising process,” said an asset manager.

A CB is a fixed-income corporate debt security that yields interest payments but can be converted to a predetermined number of common stock or equity shares.

EcoPro BM plans to use the proceeds from the CB to expand its production facilities. The company, which now manufactures 180,000 tons of cathode materials annually in two factories in Korea, aims to boost its capacity to 710,000 tons by 2027.

Write to Jun-Ho Cha at chacha@hankyung.com
 
Jongwoo Cheon edited this article.