Conversion Price of 21,000 KRW for 8th CB
Yield Exceeds 36%
Expectations among convertible bond (CB) investors are rising following the news of a 600 billion KRW technology transfer by NIBEC. The large-scale technology transfer has caused the company's stock price to surge, presenting an opportunity for significant profits through stock conversion.
According to the financial investment industry on May 30, NIBEC announced on May 28 that it had signed a technology transfer agreement with a US-based pharmaceutical and biotech company for its peptide-based fibrosis treatment candidate, 'NP-201'. NP-201 successfully completed a global Phase 1a clinical trial in 2023 and is currently preparing to enter Phase 2.
The total value of the contract, including upfront and milestone payments, is up to $435 million (approximately 595.2 billion KRW). The running royalty after final commercialization will be 4% of net sales. The upfront payment is $8 million (1.09 billion KRW), which is expected to be received within 30 days from the effective date of the contract.
This news has also heightened expectations among investors in NIBEC's 8th CB issuance. In 2022, NIBEC issued CBs worth 25 billion KRW. The recipients included Suseong Asset Management, Mirae Asset Securities, and DB Financial Investment. The coupon and maturity interest rates were 0% and 3%, respectively.
Of the total, 5 billion KRW was intended for operating funds such as preclinical and clinical expenses for new drug development, and 20 billion KRW was allocated for debt repayment. According to the first quarter report of this year, the actual amount used was 5 billion KRW, which was spent on the repayment of the 6th CB and the 7th BW (bond with warrants).
The conversion request period runs from November 22, 2023, to October 22, 2027. At the time, the conversion price was 21,175 KRW.
Since the conversion request period began, investors have steadily converted their bonds into shares. In December 2023, bonds worth 3.1 billion KRW were converted, and in October 2024, 8.9 billion KRW. Additionally, in February and May of this year, bondholders exercised their early redemption rights. As a result, as of May 22, the remaining balance of the 8th CB is 6,241.4 million KRW.
The previous day's closing price for NIBEC was 28,950 KRW. Currently, the conversion price for the 8th CB is 21,175 KRW, meaning investors who have not yet requested stock conversion or early redemption can expect a profit margin of approximately 36.72%. In particular, since NIBEC's stock price hit the upper limit immediately following the technology export news, the potential return could increase further depending on future developments.
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