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[Alpha Biz=(Chicago) Reporter Paul Lee] Shares of LG Energy Solutions fell nearly 3% due to concerns over the burden of volume due to the issuance of exchange bonds (EB) by its parent company, LG Chem.
According to Market Point on the 12th, LG Energy Solution closed at 534,000 won, down 16,000 won (2.91%) from the previous trading day. The LG Chem also closed at 653,000 won, down 0.15%.
The two companies' stock prices fell side by side because LG Chem's EB issuance highlighted concerns over a major shareholder overhang (potential selling volume), which has been one of the biggest concerns for investors since the listing of LG Energy Solutions.
On the previous day, LG Chem announced that it would issue $ 2 billion worth of foreign currency EB (about 2.6 trillion won) for the purpose of raising global investment funds. Exchangeable bonds are a type of corporate bond that is entitled to exchange for stocks held by the issuing company (treasury stock or third-party stock). The LG Chem is the largest shareholder with a 81.84% stake in LG Energy Solutions.
The exchange price was set at around 700,000 won, which gave LG Energy Solution's closing price (550,000 won) a premium of 25% (5 years) and 30% (7 years).
If the stock price of LG Energy Solutions rises above the exchange price, private creditors can exchange LG Chem bonds for LG Energy Solutions shares and earn profits from the sale. The exchange claim will be available from the 28th of next month.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
