[Disclosure] ISU PETASYS (007660) to Acquire KRW 42B Convertible Bonds of Carbon Nanotube Maker ‘JEIO’ to Accelerate Acquisition

Source Facts: Financial Supervisory Service Electronic Disclosure System (DART) / 2024-11-08

Disclosure Type: Decision on Acquisition of Equity-Related Bonds (Voluntary Disclosure)

💡 3-Second Summary

For business diversification, ISU PETASYS has decided to acquire KRW 42 billion worth of convertible bonds (bonds that can later be converted into shares) issued by ‘JEIO’, a manufacturer of core secondary battery materials.

📊 1. [Summary of Core Disclosure Content & Key Figures]

• Target Bond: The 2nd Unregistered, Unsecured Private Convertible Bonds (CB) issued by JEIO Co., Ltd.
• Acquisition Amount: KRW 42,000,000,000 (15.74% of ISU PETASYS’ equity capital of KRW 266.7 billion)
• Bond Terms: Coupon Rate: 0.0% / Maturity Interest Rate: 0.0% (Maturity Date: March 7, 2030)
• Conversion Price: KRW 19,475 per share (Refixing floor set at 70% of the initial price upon stock price decline)
• New Shares upon Conversion: 2,156,611 shares (without adjustment) up to 3,080,759 shares (with maximum downward refixing)
• Conversion Exercise Period: March 7, 2026 – February 7, 2030
• Scheduled Acquisition Date: March 7, 2025 (Cash acquisition)
• Interlinked Transactions: Concurrently executed a share purchase agreement for existing shares (5,750,000 shares) and third-party allocation paid-in capital increase participation to secure management control over JEIO.

📈 2. [Expert Perspective: Analysis of Market & Stock Impact]

• Short-Term Outlook (Cash Outflow & Financial Drag): ISU PETASYS is currently at a critical juncture requiring heavy capital expenditure for its core AI PCB (MLB) production lines. Diverting a massive amount of cash to acquire another corporate entity, including this KRW 42 billion CB purchase, is highly likely to be viewed by the market as a short-term cash strain, exerting negative pressure on the stock price.
• Financial Risk-Reward Evaluation: JEIO is a financially stable company that recorded revenue of KRW 114.5 billion and a net profit of KRW 17.4 billion in 2023. Securing these CBs at a ‘0% interest rate’ is highly favorable for ISU PETASYS. Furthermore, the terms include a downward refixing (up to 70%) to hedge loss risks, accompanied by a corresponding upward adjustment clause when the stock price recovers.
• Long-Term Outlook (Diversification vs. Synergy Doubt): This is a strategic move to transition from a single-focused AI hardware supplier into a broader secondary battery and EV material market. However, because cross-industry synergies between AI PCBs and carbon nanotubes are limited, it will take considerable time for the market to appreciate this M&A as an organic fundamental scale-up.

📝 Editor’s Comment (by K-STOCK Editor)

ISU PETASYS is aggressively branching out into the electric vehicle and secondary battery materials territory. Purchasing KRW 42 billion in JEIO’s convertible bonds with absolute zero-percent coupon and maturity yields underscores their ultimate resolution to fully absorb the company. However, the investment community remains highly skeptical. The bulk of the recently announced painful KRW 550 billion paid-in capital increase—specifically about KRW 300 billion—is allocated precisely to fund this acquisition. Shareholders who anticipated complete focus on AI board capacity expansion are now facing steep dilution just to finance a cross-industry venture. While it may serve as a future engine of growth, investors must closely watch the funding strain and overhang risks running up to the final payment deadline in March 2025.

📢 Disclaimer & Source Information

Source: This content has been structured and newly generated based on official filing data from the Financial Supervisory Service Electronic Disclosure System (DART).

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