SNT Group has begun large-scale fundraising by utilizing its treasury shares. Group affiliates, including SNT Holdings, had purchased their own shares years ago, and as the group's core businesses, such as energy and defense components, have experienced a boom and stock prices have risen, they are now putting these shares to use. With the presidential election approaching, major party candidates are actively discussing how publicly listed companies should utilize their treasury shares to positively impact stock prices. There are generally many opinions suggesting they should be cancelled, and it remains to be seen how SNT Group's case will reflect this.
The holding company equivalent of SNT Group, SNT Holdings, and SNT Dynamics announced on the 23rd that they would issue convertible bonds that involve exchanging their treasury shares and subsidiary shares. SNT Dynamics plans to issue convertible bonds worth 110 billion won targeting 2,524,267 of its own shares, while SNT Holdings plans to issue convertible bonds worth 20 billion won and 70 billion won, targeting their own shares and SNT Energy shares, respectively.
The target for the issuance of the convertible bonds is the special purpose corporation 'Pipe Solution No. 3' established by IMM Credit and Solution. Notably, all of the convertible bonds being issued this time have an exchange price with a 10% premium over the base stock price, and the coupon rate of the bonds is 0%, with the maturity interest rate being only 1.0% per annum. This indicates that investors are betting solely on a rise in stock prices.
The company noted, "IMM first proposed a plan to liquidate the treasury shares held by the company to secure the necessary funds, and the decision to issue convertible bonds was made through consultation." SNT Dynamics plans to allocate the funds raised to working capital required for research and development and sales growth, as well as to facility funding. SNT Holdings plans to use the 90 billion won raised for investment in other companies.
External experts have noted that SNT Group holds a significant amount of treasury shares. As of the end of March, SNT Dynamics' treasury share ownership ratio reached 32.7%. SNT Holdings and SNT Motiv also hold treasury shares with ownership ratios of 11.31% and 10.20%, respectively.
In fact, SNT Group's treasury shares were seen as a double-edged sword. SNT Group's governance structure is led by Chairman Choi Pyeong-kyu, who oversees the major affiliates through SNT Holdings, but because the largest shareholder has a high equity stake, the group has limited utility as a defense mechanism for management, typically associated with treasury shares.
사실 SNT그룹의 자사주는 계륵과 같은 존재로 여겨졌다. SNT그룹은 지배구조 정점에 있는 최평규 회장이 SNT홀딩스를 통해 주요 계열사를 거느리는 형태인데, 최대주주의 지분율이 높아 통상 자사주의 역할로 여겨지는 경영권 방어 수단으로서 효용이 없기 때문이다.
However, recently, as stock prices skyrocketed, the treasury shares accumulated by the company became a valuable means of fundraising. The shares, acquired at low prices in the past, ultimately served as a capital source for expanding the business.
As of the beginning of the year, SNT Holdings' stock price has doubled from 22,000 won to around 44,000 won, and SNT Energy and SNT Dynamics have also seen stock price increases of about 100% this year.
SNT Energy and SNT Dynamics are rapidly expanding their businesses. SNT Energy, which produces air-cooled heat exchangers and heat recovery steam generators (HRSG) used in power plants, has greatly increased its workload as global power demand has surged.
SNT Dynamics, which produces defense components, is also receiving a steady stream of orders from clients such as the Defense Acquisition Program Administration, Korea Aerospace Industries, and Hanwha Aerospace. The company stated, "As orders increase, the demand for operating capital is also rising, and funds for research and development are needed. Thus, we are now able to secure the necessary funds by issuing convertible bonds."
The industry is paying attention to whether SNT Group can secure the necessary funds using its accumulated treasury shares, expand its business with funds secured in a timely manner, and ultimately create a virtuous cycle that will also raise stock prices.
While investors believe that treasury shares should always be cancelled, if used wisely in necessary areas, the strategy of utilizing treasury shares can also be interpreted positively.
By issuing convertible bonds this time, the group secured 200 billion won in funds and still has plenty of room to procure additional funds if necessary. Even after issuing the convertible bonds, SNT Dynamics' treasury share ownership ratio remains above 20%, and SNT Motiv also holds 10.2% of its own shares.