Bonne 500 Million KRW Scale CB Stock Conversion
Over 35% of Total Shares Remain After Conversion in 3rd and 4th Rounds
The convertible bond (CB) conversion request for Bonne, a cosmetics manufacturer listed on KOSDAQ, has begun. This is analyzed to be because the stock price recently exceeded the conversion price due to favorable factors such as strong recent performance and the listing of its subsidiary. Since the issued CB scale is large enough to exceed 35% of the total shares, an overhang (potential waiting volume) issue may arise depending on the future stock price trend.
According to the financial investment industry, Bonne plans to list the 4th series CB worth 560 million KRW on the 28th. This corresponds to a total of 304,512 shares. It accounts for 1% of the total issued shares. The conversion price is 1,839 KRW.
In February last year, Bonne issued the 4th series CB worth 10.5 billion KRW. At the time of issuance, the conversion price was 2,535 KRW, accounting for 11.89% of the total shares. The 4th series CB has been convertible since February. However, as the stock price continued to decline, the conversion price was lowered. Bonne’s stock price fell to 1,363 KRW during trading in April. Because of this, the conversion price was lowered from 2,535 KRW to 1,839 KRW.
However, the stock price rose recently due to improved performance and the listing of its subsidiary. Bonne recorded consolidated sales of 14.337 billion KRW and operating profit of 323 million KRW in the first quarter. Sales increased by 10.96% compared to the same period last year. Operating profit turned positive. Bonne’s main business, the cosmetics original design manufacturing (ODM) business, and the improved performance of its subsidiaries contributed to this.
Along with this, its subsidiary Atosafe is preparing to enter KOSDAQ next year through a SPAC (Special Purpose Acquisition Company) listing. This company sells laundry detergents and fabric softeners manufactured through an original equipment manufacturer (OEM) to online malls such as Home&Shopping and Coupang. Major products include Shisler liquid detergent and Milk Cotton. It recorded consolidated sales of 35.1 billion KRW and operating profit of 2 billion KRW last year. Thanks to this, Bonne’s stock price rose to 2,210 KRW during trading on the 11th.
Although the amount of this conversion request is small, the overhang issue is expected to continue as the 4th series still remains and the 3rd series also exists. The 3rd and 4th series CBs have a 0% coupon and maturity interest rate. This can be interpreted as an investment to gain profit by exercising the conversion right. The remaining amount of the 4th series CB requested for conversion this time is 9.94 billion KRW. In terms of shares, it corresponds to 5,405,112 shares. This accounts for 17.61% of the total 30,699,596 shares in the first quarter.
The 3rd series CB, issued at 12 billion KRW in 2021, is even larger. The conversion price of the 3rd series CB was adjusted from 2,785 KRW to 1,950 KRW. Because of this, the number of shares increased from 4,308,797 shares to 6,153,485 shares. The scale, which was 14.04% of the total shares at issuance, grew to 20.05%. If all Bonne CBs are converted, 37% of the total shares will be released into the market.
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