CMG Pharmaceutics, 8th Round CB Conversion Price Dropped to Lowest Level

8th Series CBs Convertible to 17% of Total Shares
4th Series CBs Still Outstanding
Convertible Volume May Increase Further if Stock Price Falls

CMG Pharmaceutical's 8th series convertible bonds (CB) worth 45 billion KRW have seen their conversion price fall close to the lowest level. Additionally, the 4th series CBs are still outstanding. Concerns over overhang (potential waiting supply) are growing.

According to the Financial Supervisory Service's electronic disclosure system on the 13th, CMG Pharmaceutical recently announced that the conversion price of the 8th series CB has dropped from 2,161 KRW to 1,862 KRW due to a decline in market price. As a result, the number of convertible shares increased from 20,823,692 shares to 24,167,561 shares, which corresponds to 17.40% of the total 138,892,244 shares.

In July last year, CMG Pharmaceutical issued the 8th series CB. The coupon rate and maturity interest rate of this CB are 0% and 1.5%, respectively. The conversion price was set at 2,161 KRW. The issuance was planned to allocate 25 billion KRW for facility funds, 10 billion KRW for operating funds, and 10 billion KRW for acquiring securities of other companies. The conversion request period is from July this year until June 11, 2029.

However, the actual amount used so far is only 9 billion KRW. The company explained in its Q3 report last year that "250 billion KRW for production facility construction and 10 billion KRW for acquiring securities of other companies will be used later."

CMG Pharmaceutical not only has the 8th series CB but also the 4th series CB outstanding, so concerns about overhang are expected to continue for some time.

In March 2023, CMG Pharmaceutical issued CBs worth 14.6 billion KRW to acquire Matica Bio CBs. The conversion request period was from March 29 last year to February 28, 2026. The current conversion price of this CB is 1,753 KRW, and the convertible shares amount to 8,328,579 shares, which corresponds to 6% of the total shares.

Since the conversion period for the 8th series CB starts from July this year, depending on the stock price situation, shares equivalent to 23.40% of the total shares could be released into the stock market. Also, since neither the 4th nor the 8th series CBs are at their lowest conversion prices, the convertible volume could increase further. The lowest conversion prices for the 4th and 8th series CBs are 1,677 KRW and 1,729 KRW, respectively.