Olix, Immediate Exit Upon CB Investor Conversion Timing Delay

2nd Round CB Investors Expect 45% Returns
3rd Round CB Convertible from Next Year... Overhang Possibility Increases

Investors of Olix's second tranche convertible bonds (CB) are converting their bonds into shares as soon as the conversion period arrives. This is interpreted as a decision based on the fact that the CB conversion price is lower than the current stock price, allowing for immediate profit.

According to the Financial Supervisory Service's electronic disclosure system on the 19th, Olix recently announced that the conversion rights for the second tranche CB have been exercised. The total amount requested is 16.52 billion KRW, with a conversion price of 13,526 KRW per share. A total of 1,221,350 shares, which is 7.09% of the total 17,238,223 shares, are expected to be issued. The remaining balance is 7.08 billion KRW. The scheduled stock listing date is January 3rd of next year.

CB investors converted their bonds into shares immediately upon the conversion period arrival. Since the current stock price is higher than the conversion price, it appears that they judged immediate profit to be possible. The conversion period for the second tranche CB is from the 15th of this month until November 15, 2026.

Olix issued a total of 23.6 billion KRW worth of second tranche CBs last December. The coupon rate and maturity interest rate are 0% and 4%, respectively. The issuers are Kiwoom Hero No.4 Private Equity Fund and Aju Joeun Venture Fund 2.0. The company stated that the funds would be used for research and development (R&D) costs for developing therapeutics based on RNA interference (RNAi) technology.

Investors are expected to earn significant profits from this stock conversion. Olix’s closing price on the previous day was 19,620 KRW. If the current stock price continues until the listing date, CB investors are expected to gain approximately 45% profit.

However, since there is still a remaining balance of the second tranche CB and the conversion period for the third tranche CB begins next year, concerns about overhang (potential large-scale selling pressure) are expected to continue. Olix issued 14.7 billion KRW worth of third tranche CBs in March this year. The coupon rate and maturity interest rate are 0% and 3.5%, respectively.

The conversion period for the third tranche CB is from March 22 next year to February 22, 2029. The conversion price for this CB is 16,283 KRW, which is lower than the current stock price, making conversion into shares highly likely. The number of shares that can be issued is 902,782, accounting for 5.23% of the total shares.