TKG Huchems stock targets TKG Mchem balance-sheet risks
Published on 11/06/2026 at 02:28 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWSTKG Huchems restructures subsidiary exposure
- TKG Huchems agreed to buy additional shares in TKG Mchem to strengthen control and address investor settlement risks.
- The acquired redeemable convertible preferred shares are intended for conversion into common shares.
- TKG Mchem's accounting liabilities rose sharply after the subsidiary adopted K-IFRS as part of the listed group's consolidated structure.
TKG Huchems moved to reinforce control of its semiconductor and display materials subsidiary TKG Mchem while addressing a funding risk created by redeemable convertible preferred shares. The board approved the purchase on October 21, 2026, according to eToday.
Control stake rises through RCPS purchase
TKG Huchems agreed to acquire 277,403 TKG Mchem shares for KRW 46.7 billion. The transaction would lift its ownership from 50.0% to 78.4% and was scheduled for completion on October 30.
The purchase is not a capital increase at TKG Mchem. Existing financial investors are selling their redeemable convertible preferred shares to the parent company. TKG Huchems said it plans to convert the preferred shares into common shares, which would remove the related liability classification and reduce the subsidiary's financial burden.
Accounting change exposed financial pressure
TKG Mchem had previously treated the preferred shares as equity under Korean GAAP. After becoming a consolidated subsidiary of listed TKG Huchems, it was required to apply K-IFRS from 2025. The accounting treatment classified redemption obligations and certain adjustment terms as financial and derivative liabilities.
eToday reported that TKG Mchem's liabilities at the end of 2024 rose from KRW 41.9 billion to KRW 90.4 billion after retrospective K-IFRS application, while equity fell from KRW 49.6 billion to KRW 13.1 billion. The report said the subsidiary's debt ratio reached 832.4% at the end of 2025, with cash and cash equivalents of about KRW 1.7 billion.
What the transaction changes
TKG Huchems described the early settlement as a way to remove potential investor disputes and penalties linked to an uncompleted initial public offering. The company also said the transaction could allow financial investors to recover funds ahead of the contractual maturity while giving TKG Huchems firmer control of the subsidiary.
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TKG Huchems company facts
- Company: TKG Huchems Co., Ltd.
- ISIN: KR7069260008
- Transaction: Acquisition of 277,403 TKG Mchem shares for KRW 46.7 billion
- Planned ownership: 78.4%
- Board approval: October 21, 2026
- Planned completion: October 30, 2026
