Amosense CB Conversion Price Below Stock Price... Early Redemption Concerns Arise

Conversion Prices of 2nd and 3rd Series CBs Hit Lowest Level
Cash and Cash Equivalents Only 3.5 Billion KRW as of Q3 Last Year

The conversion prices of Amocence's 2nd and 3rd series convertible bonds (CB) have dropped to their lowest levels. There is a significant gap between the current stock price and the conversion prices. Since Amocence's cash and cash equivalents amount to only 3.5 billion KRW, an early redemption request could pose a burden on the company.

According to the Financial Supervisory Service's electronic disclosure system on the 16th, Amocence announced that the conversion prices of the 2nd and 3rd series CBs were adjusted downward due to a decline in market price on November 14 last year and June 14 this year, respectively. The 2nd series dropped from 11,517 KRW to 8,062 KRW, and the 3rd series from 13,057 KRW to 9,140 KRW.

As a result, the number of convertible shares increased from 868,281 to 1,240,387 for the 2nd series, and from 765,872 to 1,094,091 for the 3rd series. This means that 20.80% (2,334,478 shares) of the total 11,220,264 shares could be released into the market. This inevitably raises concerns about overhang (potential large-scale selling pressure).

Amocence issued 20 billion KRW worth of 2nd and 3rd series CBs in April and June last year, respectively. Both have a zero percent coupon and maturity interest rate. The conversion request period for the 2nd series is from April 26, 2024, to March 26, 2029, and for the 3rd series from June 14, 2024, to May 14, 2029.

In particular, if early redemption demands arise, it could burden the company. The closing price of Amocence was 5,420 KRW the previous day, showing a large gap with the 2nd and 3rd series CB conversion prices. As of the third quarter of last year, Amocence's cash and cash equivalents stood at 3.586 billion KRW, a 64.19% decrease compared to 10.015 billion KRW at the end of 2023.

Therefore, the future direction of Amocence's stock price has become crucial. There is still some time left from the start of the conversion request period to maturity and early redemption dates. The maturities of the 2nd and 3rd series CBs are April 26, 2029, and June 14, 2029, respectively, but early redemption can be requested earlier, starting from April 26, 2026, and June 14, 2026.