[Governance] CytoGen CEO Jeon Byung-hee Regains Majority Shareholder Status Through 'CB Call Option'

[Asia Economy Reporter Jang Hyowon] Jeon Byunghee, CEO of Cytogen, a KOSDAQ-listed company, has regained his position as the largest shareholder by exercising the convertible bond (CB) call option (put right). Previously, CEO Jeon had relinquished the largest shareholder position to the financial investor (FI) Ascent Bio Fund.

Ascent Bio Fund acquired Cytogen shares through on-market purchases for over a year, surpassing the stake of Cytogen’s founder, CEO Jeon Byunghee. However, CEO Jeon still holds remaining call options on the CB, suggesting potential for further strengthening of management control.

Jeon Byunghee Regains Largest Shareholder Status, Surpassing Fund Established by CJ Family’s Lee Jaehwan

According to the Financial Supervisory Service’s electronic disclosure on the 29th, Cytogen’s largest shareholder changed from Ascent Bio Fund to CEO Jeon Byunghee and two others on the 27th.

Prior to this, CEO Jeon held 1,144,400 shares, and by converting CBs into stocks this time, he newly acquired 81,683 shares, securing a total of 1,226,083 shares, representing a 20.8% stake. Including shares held by related parties, the stake amounts to 21.71%.

The previous largest shareholder, Ascent Bio Fund, additionally purchased shares on the market from the 21st to the 24th, holding a total of 1,220,916 shares, but with a 20.71% stake, it fell short of CEO Jeon and others.

Earlier, on the 20th, Ascent Bio Fund had surpassed founder CEO Jeon Byunghee’s stake to become Cytogen’s largest shareholder.

Since October last year, Ascent Bio Fund steadily purchased Cytogen shares on the market, raising its stake to around 20%. Although disclosed as a simple investment, the stake exceeded CEO Jeon’s, making it the largest shareholder of Cytogen.

The largest contributor holding 67.5% of Ascent Bio Fund is Lee Jaehwan, former CEO of CJ Powercast and younger brother of CJ Group Chairman Lee Jaehyun. The second-largest shareholder of the fund, Jaesan Holdings, holding 26.1%, is also a personal company established by former CEO Lee. Lee is under suspicion of involvement in drug offenses, sexual violence, and stock manipulation.

CEO Jeon Byunghee Strengthens Management Control through CB Call Option

The CB converted by CEO Jeon this time is part of the third series CB issued by Cytogen in September last year, worth 10 billion KRW.

The third series CB includes a ‘call option’ allowing Cytogen or a third party designated by Cytogen to exercise on 40% of the total volume. Cytogen designated CEO Jeon as the call option exerciser.

On the 24th of last month, CEO Jeon exercised the call option to acquire CBs worth 1.65 billion KRW. With a conversion price of 20,200 KRW, he acquired 81,683 shares. If CEO Jeon exercises all remaining call options, he could additionally acquire CBs worth 2.35 billion KRW, approximately 116,336 shares.

Additionally, the fourth series CB issued by Cytogen in May, worth 30 billion KRW, also includes a 30% call option, allowing purchase of up to 9 billion KRW worth. This means mechanisms for CEO Jeon’s management control enhancement are prepared through CBs.

However, if CEO Jeon receives and exercises all CB call options, additional funding is expected to be necessary. When acquiring the 1.65 billion KRW worth of CBs this time, CEO Jeon took out a loan using 130,000 Cytogen common shares he owns as collateral.

Meanwhile, Cytogen is a liquid biopsy specialist company based on circulating tumor cells (CTC) and was listed on the KOSDAQ market in 2018 through a technology special case.