[After CB Issuance] Remed, Increasing Convertible Volume Amid Falling Stock Price

[Asia Economy Reporter Yoo Hyun-seok] As Remed's stock price continues to decline, the potential volume of convertible bonds (CB) that may be converted is also increasing. Recently, the stock price has fallen below the conversion price, raising the possibility of additional repricing, and the overhang (potential sell volume) issue is expected to persist.

According to the Financial Supervisory Service's electronic disclosure system on the 18th, Remed lowered its conversion price from 27,400 KRW to 26,500 KRW on the 14th.

The number of convertible shares increased from 1,094,890 shares to 1,132,075 shares. This corresponds to 18.59% of the total shares (6,088,916 shares).

Remed issued 30 billion KRW worth of CBs in August last year. The recipient was Kiwoom Private Equity Aesthetic Private Investment Partnership. The nominal interest rate is 0%, and the maturity interest rate is also 0%.

The issue price was 29,052 KRW, and the conversion request period is from August 14 this year to July 14, 2035. The bond maturity date is August 14, 2035. The minimum adjustment limit is 20,336 KRW.

The company planned to use 18 billion KRW of the 30 billion KRW CB for facility funds such as purchasing and constructing new factory sites and establishing overseas production subsidiaries, and 12 billion KRW for operating funds including research and development. As of the end of last year, only 4.4 billion KRW was used for operating funds, and the remainder was deposited after subscribing to financial products.

This is not the first time the conversion price has been adjusted. After being lowered from 29,052 KRW to 27,400 KRW in February, this is the second adjustment. Notably, Remed closed at 24,600 KRW on the 17th. Since the current stock price is below the conversion price, further repricing may occur.

As a result, the future stock price movement has become important for Remed. Although there are about three years left until maturity, if the stock price continues to decline, the convertible volume may increase further, leading to an overhang issue. Also, if the stock price fails to exceed the conversion price, concerns about redemption may arise later. Remed holds 17.5 billion KRW in short-term financial products and 10.5 billion KRW in cash and cash equivalents.

Founded in 2003, Remed specializes in researching and developing electroceuticals. Electroceuticals refer to electronic devices that treat diseases through electrical stimulation instead of drugs or injections. The company was transferred from KOSDAQ's KONEX market to KOSDAQ on December 6, 2019, through a Tesla (unrealized profit company) special listing.

The business areas are broadly divided into brain rehabilitation, chronic pain treatment, and aesthetics. Among total sales, chronic pain products account for the largest share at 44.7%, followed by aesthetics (23.7%), others (20.9%), and brain rehabilitation (10.6%).

Last year, sales and operating profit were 16.6 billion KRW and 1.7 billion KRW, respectively, down 10.33% and 60.72% from the previous year. There is a significant gap compared to the performance targets set at the time of listing. The original 2020 sales and operating profit targets were 28.4 billion KRW and 8.6 billion KRW, so the actual performance gap rates are 41.4% and 80.5%, respectively. The company cited the global economic downturn caused by COVID-19 as the reason for the poor performance.