[Asia Economy Reporter Hyunseok Yoo] Jaan Bio’s convertible bonds (CB) worth 10 billion KRW are expected to be released all at once. With the total number of shares already increased due to paid and free capital increases, the conversion of an additional volume exceeding 15% into shares raises concerns about stock dilution.
According to the Financial Supervisory Service’s electronic disclosure system DART on the 28th, Jaan Bio announced on the 23rd that the conversion rights for the 2nd series CB had been exercised. The scheduled listing date is the 7th of next month.
Jaan Bio issued CBs worth a total of 10 billion KRW in April last year. They planned to use 7 billion KRW for investments and 3 billion KRW for operations. In fact, they spent 7 billion KRW on investments in other companies and 3 billion KRW on operating funds. The nominal and maturity interest rates were 3%. At that time, the conversion price was 3,722 KRW. The total convertible shares amounted to 2,686,727 shares, representing 8.68% of the total issued shares at that time. The recipients were the affiliate Jaan Holdings and the largest shareholder, CEO An Si-chan. They invested 8.7 billion KRW and 1.3 billion KRW respectively. The conversion request period is from the 23rd until March 23, 2023.
The 2nd series CB’s conversion price was adjusted several times. In May last year, due to Jaan Bio’s stock price decline and a free capital increase, the conversion price dropped to 609 KRW. As a result, the convertible shares increased by 511.16% to 16,420,361 shares. The following month, due to another market price drop, the issue price was lowered to 494 KRW. The convertible shares rose to 20,242,914 shares. Subsequently, in July, August, October, and November last year, the conversion price was further adjusted due to stock price declines and other factors.
The conversion price adjustments did not end last year. In December, Jaan Bio conducted a paid-in capital increase through a rights offering and a general public offering of forfeited shares worth 34.6 billion KRW. This resulted in the issuance of 140 million new shares. The company stated that out of the funds raised through the capital increase, 16 billion KRW would be used for debt repayment, 9.4 billion KRW for masks and disinfectants, and 9.2 billion KRW for the biohealth platform business.
Following the paid-in capital increase, the 2nd series CB’s conversion price dropped to 230 KRW. The convertible shares increased to 43,478,260 shares, a 1,518% increase compared to the time of issuance. This corresponds to 15.46% of the total issued shares of 281,278,275 shares.
Since more than 15% of the total shares will be listed on the stock market, stock price dilution is expected to occur inevitably. A company official said, "Even if there is a temporary decline due to concerns about stock dilution, we believe that the corporate value will steadily grow in the mid to long term as a global biohealth company." He added, "At the last regular shareholders’ meeting, a reverse stock split was decided to stabilize the stock price. Fifty common shares will be consolidated into one share, reducing the number of circulating shares and increasing the price per share, which is expected to stabilize the stock price." He further stated, "The company is making various efforts to enhance shareholder value."
Jaan Bio recently changed its company name twice. After CEO An Si-chan of Jaan Group acquired it last year, the name was changed to Jaan, and the current name has been maintained since March. Jaan Group, established in January 2011, operates a sales platform business for clothing and cosmetic products. It is well known for its platform called 'CELECON.'
After being acquired by CEO An Si-chan, Jaan Bio expanded its scope from the existing paint business to develop biohealth platform and mask businesses. Recently, together with Jaan Cosmetic, it signed a contract to jointly acquire 100% of the shares of the Italian fashion brand 'Hydrogen S.r.l.'
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