Convertible Bond Issuance Revised (45B KRW, Conversion Price 1,656 KRW)... Potential Dilution Up to 26.53% Including Existing CBs
MGEN SOLUTIONS revised its convertible bond issuance plan, reducing the issuance amount from 6B KRW to 4.5B KRW and lowering the conversion price from 1,750 KRW to 1,656 KRW. Consequently, the number of new convertible shares decreased from approx. 3.43M to 2.72M shares. (Current price: 1,550 KRW; conversion price at a slight premium but can be adjusted down to 1,160 KRW in case of market decline)
The proceeds are for operating funds (raw material purchase and new product development). Investors changed to Queenber Mezzanine 1ho Union (2B KRW) and BS Partners (2.5B KRW), excluding Song Jun (1.5B KRW).
There are three existing outstanding convertible bonds totaling 13.5B KRW, and including the new issuance, total potential convertible shares amount to 9.27M, representing approximately 26.53% of current outstanding shares. This poses a significant dilution risk for existing shareholders.
The CB includes a put option (1-year lock-up, then quarterly) and a call option for the issuer (up to 50% of principal, with a 2% acquisition fee). Notably, the call option restricts conversion rights until its expiration, potentially delaying conversion by investors.
[AI Overall Analysis]While this correction reduces the dilution compared to the original plan, the total potential dilution including existing CBs still reaches 26.53%, which is concerning for existing shareholder value. Although the conversion price is above the current stock price, the anti-dilution clause could lower it further, accelerating dilution if the stock price drops, likely negatively impacting short-term stock performance.
KOSDAQ Filing Information
Filing: [Correction of Description] Report on Major Matters (Decision on Issuance of Convertible Bonds)