Aprogen Biologics Issues 50.8B KRW Convertible Bond to Affiliate AptoChrom; Conversion Would Surge Shares by 93%, Diluting Shareholder Value
Aprogen Biologics decided to issue the 20th unregistered, interest-bearing, unsecured private convertible bond worth 50.8 billion KRW
The issuance is targeted at its affiliate AptoChrom, in which Aprogen holds a 52.28% stake as the largest shareholder
Conversion price set at 3,778 KRW, approximately 27% premium to current market price of 2,975 KRW, but can be adjusted down to a minimum of 2,645 KRW if the stock price falls
Upon conversion, 13,446,267 new shares will be issued, representing 93.3% of the current outstanding shares (14,412,374), causing massive shareholder dilution
All proceeds of 50.8 billion KRW will be used to repay debt owed to affiliate AptoChrom, with payment via offset of existing receivables (no cash inflow)
Combined with outstanding convertible bonds totaling 128 billion KRW (24,427,092 convertible shares), the potential dilution ratio reaches 262.78% of current shares
Bondholders have a put option exercisable every 3 months starting December 23, 2027, with early redemption rates from 103.076% to 105.783%
Maturity date is June 23, 2029, with a redemption amount of 106.3412% of face value
[AI Summary]This convertible bond issuance by Aprogen Biologics to repay debt to its affiliate AptoChrom represents a debt-to-equity swap without cash inflow, aiming to improve financial structure. However, the conversion would dilute existing shareholders by 93.3%, and together with outstanding CBs, the potential dilution reaches 262.78%, which is extremely negative for the stock price. Although the conversion price is at a premium, the downward adjustment clause increases future conversion risk, posing significant investment risk.
KOSPI Filing Information
Filing: [Correction of Description] Report on Major Matters (Decision on Issuance of Convertible Bonds)