Global beauty platform company CTK announced on the 3rd that it has successfully issued convertible bonds (CB) worth 7 billion KRW. CTK will use the funds raised through the CB issuance to acquire a manufacturing plant in the United States capable of producing cosmetics and OTC (over-the-counter) drugs.
The first tranche of CB issued by CTK is scheduled for payment on the 6th, with two institutional investors, including the Vision KOSDAQ Venture Fund, participating in the investment.
According to industry sources, the CB is issued under favorable conditions that enhance shareholder value. A high premium rate of 40% was applied, with the conversion price set at 8,832 KRW, which is 40% above the reference stock price. There is no adjustment (refixing) clause for the conversion price based on market price fluctuations.
The nominal interest rate and maturity interest rate are both set at 0%. The maturity period is five years from the issuance date. The call option ratio is also set high at 60%. The call option gives the company the right to repurchase the CB held by investors, and for 60%, equivalent to 4.2 billion KRW, the company may fully redeem and cancel the bonds at its discretion. The company plans to exercise the call option to the maximum extent and redeem the bonds even if the stock price rises significantly in the future.
The company explained that the favorable investment conditions were due to high expectations for the acquisition of a manufacturing plant capable of producing OTC products in the United States. A CTK representative said, "The acquisition of the US OTC manufacturing plant is expected to secure a definite competitive advantage for us in the North American beauty market," adding, "The reasonable expectation of increased corporate value was reflected in the investment conditions."
An institutional investor who decided to invest in the CB stated, "We highly evaluated CTK's business capabilities accumulated over a long period in the North American market," and explained, "Considering the strengthening of business capabilities and growth potential through the acquisition of the US OTC manufacturing plant, we judged that the current stock price is in a considerably undervalued range, leading to an investment decision favorable to CTK."
On the 2nd, CTK decided to invest in CTK USA Holdings, a holding company in the United States, to acquire a corporation located in California capable of manufacturing cosmetics and OTC products. The capital increase is approximately 28 billion KRW.
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