[After CB Issuance] 40% of Total Shares... Increasing Overhang Concerns for Biolog Device

[Asia Economy Reporter Yoo Hyun-seok] Concerns over overhang (potential sell-off volume) are growing regarding the camera module specialist company Biolog Device. This is because the conversion period for convertible bonds (CB) issued last February, amounting to 40% of the total shares, has begun.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 5th, Biolog Device announced the exercise of conversion rights worth 700 million KRW on the 3rd. The total number of shares to be converted is 488,485, with a conversion price of 1,433 KRW. The scheduled listing date is the 22nd of this month. On the 3rd, Biolog Device's closing price was 1,760 KRW, and if the stock price is maintained until the scheduled listing date, investors are expected to gain approximately 23% return.

Biolog Device issued the 3rd series of anonymous, unsecured private placement CBs worth 18 billion KRW last February. The recipients included UI Venture Investment Association, Hanbit Investment, and IBK Capital. The nominal interest rate is 1.0%, with a maturity interest rate of 2.0%. Of the 18 billion KRW, 5 billion KRW and 6 billion KRW were allocated for new business investment in Vietnam and acquisition of securities of other companies, respectively. Additionally, 2 billion KRW and 5 billion KRW were planned to be used for operating funds and early redemption of the 2nd series CB, respectively. The company stated that the funds raised were used for operating capital and acquisition of shares in Coren.

The conversion claim period started on the 28th of last month and will continue until February 28, 2025. Since last month, the conversion claim period has begun, raising concerns about overhang. At the time of the 2nd series CB issuance, Biolog Device's total number of shares was 28,870,357. For the 2nd series CB, the volume convertible into shares amounts to 31.71% (9,155,645 shares) of the total.

The volume that can be released has increased further. This is because the conversion price was lowered from 1,966 KRW to 1,433 KRW in April last year due to a decline in the stock price. As a result, the convertible volume increased to 12,561,060 shares, accounting for nearly half of the total shares at 43.50%. Although there is still a considerable period left for conversion claims, this volume can be released at any time depending on the stock price.

Biolog Device is a manufacturer of smartphone camera module components. Established in 2012, it entered the KOSDAQ market in 2014. Its main products are OIS (Optical Image Stabilization) and AF (Auto Focus) FPCB Assy, which are components applied to the actuator of mobile phone camera modules.

Recently, as a new business, the company is developing and producing biometric technology-applied products such as fingerprint recognition 'Non-mobile solutions' and 'facial recognition thermal imaging devices.' Last year, it recorded consolidated sales of 90.4 billion KRW and an operating profit of 7 billion KRW. On an individual basis, it achieved sales of 64.8 billion KRW and an operating profit of 300 million KRW.