[After CB Issuance] Hans Biomed, Ostem Implant Stake Increases as Stock Price Falls

[Asia Economy Reporter Jang Hyowon] The stock conversion period for the 20 billion KRW convertible bonds (CB) issued by Hans Biomed, a KOSDAQ-listed company, has arrived. Since the current stock price is lower than the conversion price, it is unlikely that the bonds will be converted into shares immediately. If the stock price continues to fall and the conversion price is adjusted downward, Ostem Implant’s shareholding ratio in Hans Biomed could increase further.

According to the Financial Supervisory Service’s electronic disclosure on the 22nd, the conversion request period for the 4th series CB worth 20 billion KRW issued by Hans Biomed to Ostem Implant in December last year began on the 18th. It has been one year since issuance, allowing conversion into shares.

The initial conversion price of this CB was 12,808 KRW, but due to the decline in Hans Biomed’s stock price, the conversion price was re-fixed (adjusted) to 11,278 KRW on the 20th. However, based on the opening price that day, Hans Biomed’s stock price was around 10,900 KRW, so converting the CB into shares immediately would likely result in a loss.

Recently, Hans Biomed’s stock price has been on a downward trend. The company’s performance significantly declined last year. On a consolidated basis for the fiscal year ending September last year, sales were 59.1 billion KRW, down 26% compared to the previous year. Operating losses expanded by 480%, from 3.4 billion KRW to 19.8 billion KRW during the same period.

The main cause of the sales decline was the suspension of sales of key products. In November last year, Hans Biomed was ordered by the Ministry of Food and Drug Safety to suspend sales of the breast implant product ‘Bellagel’ due to the use of raw materials different from those approved. This led to a 25.2 billion KRW decrease in related segment sales.

Additionally, in December last year, Hans Biomed faced a damages lawsuit amounting to 40.5 billion KRW filed by 4,045 users of ‘Bellagel.’ The first trial is currently underway, and depending on the verdict, there is a possibility of a large provision for litigation costs.

Despite Hans Biomed’s difficult situation, Ostem Implant still has some leeway as the CB re-fixing limit remains. The minimum re-fixing limit for the 4th series CB is 70% of the initial conversion price, which is 8,966 KRW. This means the conversion price can be re-fixed even if the current stock price falls by about 17% more.

Furthermore, if the stock price falls and the CB conversion price decreases, Ostem Implant’s control over Hans Biomed will increase. Based on the current conversion price, the number of shares convertible is 1,773,364, representing a 15% stake.

If the conversion price drops to the minimum, approximately 2,230,649 new shares will be issued. In this case, Ostem Implant could secure about an 18% stake. Additionally, Chairman Choi Kyu-ok of Ostem Implant personally holds about 187,000 shares through on-market purchases, which combined could increase the stake to about 20%. Currently, the largest shareholder of Hans Biomed, former Chairman Hwang Ho-chan, holds 2,681,014 shares (26.5%).

However, Ostem Implant has stated through the media that it does not intend to acquire Hans Biomed. Chairman Choi Kyu-ok’s share purchases are considered simple investments. In fact, Hans Biomed holds a call option on 30% (6 billion KRW) of the 4th series CB, so if funds are secured, it can be redeemed.