CB Conversion Price Decreases in 2nd Round Following 1st... Concerns Overhang Rise for T&R Biofab

Stock Price Drop Adjusts Second Conversion Price from 11,807 Won to 9,814 Won
If Both 1st and 2nd CBs Convert to Shares, 20% of Total Stake Will Enter Market

Concerns over potential large-scale sell-off (overhang) of T&R Biofab are growing. The conversion price of the first tranche of convertible bonds (CB) has dropped to the minimum limit, and the conversion price of the second tranche has also fallen, increasing the volume that could be released into the market.

According to the financial investment industry, T&R Biofab announced on the 6th that the conversion price was lowered from 11,807 KRW to 9,814 KRW. This adjustment is due to the decline in market price.

T&R Biofab issued the second tranche of CB worth 24 billion KRW in July. The nominal interest rate is 0%, with a maturity interest rate of 3%. The company plans to invest 6 billion KRW in overseas market entry costs and operating funds, 12 billion KRW in myocardial treatment development and bio-surgical solution research and development (R&D), and another 6 billion KRW in facility investment.

However, the number of shares that can be issued has increased due to the stock price decline. With this conversion price adjustment, the volume that could be released into the market increased from 2,032,692 shares to 2,445,486 shares. This corresponds to 11.53% of the total issued shares of 21,199,418.

The problem is that not only the second tranche but also the first tranche issued in 2021 still remains. T&R Biofab issued the first tranche of CB worth 35 billion KRW in July 2021. The nominal interest rate was 0%, with a maturity interest rate of 1.0%. The issue price at that time was 47,890 KRW, but the conversion price was lowered to 16,762 KRW in November 2022, reflecting a bonus issue. The stock price continued to decline, and thus the conversion price has been lowered to the minimum adjustment limit, which is 70% of the original conversion price at issuance.

Of this, 3.1 billion KRW was repaid early at the request of CB investors. However, 31.9 billion KRW still remains. When converted into shares, this amounts to approximately 1,953,699 shares, about 9.22% of the total shares. If both the first and second tranche CBs are converted into shares, up to 20% could be released into the market.

If the first tranche CB investors demand repayment instead of conversion to shares, it could pose a burden on T&R Biofab. The conversion request period for the first tranche CB is from February last year until July 6, 2026. The closing price on the 7th was 10,150 KRW, nearly 40% lower than the conversion price. Although there is still a long period to convert, if the stock price remains at the current level, investors may also demand repayment. As of the first half of this year, T&R Biofab's cash and cash equivalents amount to 10.8 billion KRW, with short-term financial products worth 11 billion KRW.

T&R Biofab was established in 2013. It manufactures biological formulations and medical devices using 3D bioprinting technology. Its main products include ▲ biodegradable medical devices based on 3D bioprinting technology ▲ bioinks for tissue and organ bioprinting ▲ organoid organoids for in vitro testing ▲ 3D printed cell therapies ▲ 3D bioprinting systems.

The company entered the KOSDAQ through a technology special listing in 2018. Last year, it recorded sales of 5.8 billion KRW and an operating loss of 12.9 billion KRW, falling short of the forecasted sales of 39.5 billion KRW and operating profit of 20.2 billion KRW. In the first half of this year, it recorded sales of 2.8 billion KRW and an operating loss of 5.7 billion KRW. Compared to the same period last year, sales decreased and operating losses increased.