[After CB Issuance] Chorokbaem Company Hits 'Jackpot' with Nature Cell CB Investment

[Asia Economy Reporter Yoo Hyun-seok] Chorokbaem Company hit the jackpot with its convertible bond (CB) investment in Naturecell. Following the recent domestic clinical success of the stem cell treatment Jointstem, the stock price surged nearly 200% this year, enabling an expected return of about 270%.

According to the Korea Exchange on the 1st, Naturecell’s closing price on the 30th of last month was 30,250 KRW. The stock price rose 195.12% compared to the end of last year. The price, which was 10,400 KRW at the beginning of the year, increased by nearly 20,000 KRW in just over six months.

The key to the stock price increase is the domestic clinical success of Jointstem. In May, Albaio, an affiliate of Naturecell, announced the successful completion of the Phase 3 clinical trial of ‘Jointstem,’ a treatment for knee osteoarthritis. This product is an adult stem cell-based treatment for degenerative arthritis. Adult stem cells are harvested, isolated, and cultured from the patient’s adipose tissue, which prevents immune rejection reactions. Additionally, it is administered via a single direct injection into the patient’s knee joint cavity without surgery. Compared to conventional surgery, it has fewer side effects and a shorter recovery time.

As Naturecell’s stock price soared, CB investors also hit the jackpot.

Naturecell issued its third series of CBs worth 10 billion KRW in August last year. The coupon and maturity interest rates are both 1%. At issuance, the conversion price was 10,539 KRW. The conversion request period is from August 26 this year to July 26, 2023. The issuance target was Rasbora Investment Association. The major shareholders of Rasbora Investment Association are Chorokbaem Company and Wooridle Hubrain, holding 10% and 7.5% stakes respectively.

The conversion price was adjusted four times in September, October, November last year, and February this year. The conversion price dropped from 10,539 KRW to 8,192 KRW. Based on the closing price the day before, if the CB is converted into shares, an expected return of about 269% can be anticipated. The 10 billion KRW CB has increased in value to 36.9 billion KRW.

Meanwhile, Chorokbaem Company announced in March that it changed its name from W Holding Company to its current name and plans to strengthen its capabilities in the content business. It is an outsourcing production company that produces dramas and entertainment programs, originating from Chorokbaem M&C, founded in 2000 by former SBS drama production bureau producer Kim Ki-beom. To date, it has produced 61 dramas and SBS’s ‘K-pop Star’ series, among others.

Along with this, it plans to strengthen its existing investment business. Chorokbaem Company earned about 20 billion KRW in capital gains last year by selling companies such as IOK Company. Additionally, through its subsidiary W Investment & Finance, it has actively engaged in mergers and acquisitions (M&A) market investments. These investments contributed to a net profit of 17.7 billion KRW last year.