CHA Vaccine Research Institute Decides to Issue 6th Series Convertible Bonds Worth 4 Billion KRW… Conversion Price at 3,210 KRW, Risk of Dilution and Collateral Pledge
CHA Vaccine Research Institute (AriBioLab) decided to issue 4 billion KRW worth of 6th series unregistered unsecured private convertible bonds to raise operating funds. The conversion price is 3,210 KRW, approximately 19% below the current stock price (3,960 KRW), raising concerns about dilution of existing shareholders.
Upon conversion, 1,246,105 shares will be issued, representing 4.63% of total outstanding shares (26,912,996). Combined with the existing 5th series CB (50 billion KRW, conversion price 4,622 KRW), total convertible shares amount to 2,327,887 (8.65%), indicating significant potential dilution.
The conversion price is subject to adjustment every 5 months based on market price, with a floor at 70% of the initial conversion price (2,247 KRW). A decline in stock price would further increase the number of convertible shares, expanding dilution.
Bondholders have a put option starting one year after issuance, exercisable every 3 months, with a guaranteed yield of 8% compounded annually. The company holds a call option on up to 2 billion KRW and will pay 80 million KRW as acquisition cost.
Collateral: The company pledges its 29th series CB of AriBio Co., Ltd. (face value 2.8 billion KRW) as a first-priority pledge. The maximum secured amount is 130% of the CB face value (5.2 billion KRW), but the actual collateral value is only 2.8 billion KRW, posing a risk of insufficient coverage.
All proceeds (4 billion KRW) will be used for R&D and operating expenses, indicating a short-term funding need.
KOSDAQ Filing Information
Filing: [Correction of Description] Report on Major Matters (Decision on Issuance of Convertible Bonds)