[At a Crossroads for Listed Companies] JW Biotech Cancels Acquisition Due to 'Qualified' Audit... Only CB Accumulates③

[Asia Economy Reporter Jang Hyowon] KOSDAQ-listed company GW Vitec has canceled the stock purchase agreement for the "TV manufacturer with a qualified audit opinion" it had agreed to acquire last month. At that time, GW Vitec made a substitute payment with convertible bonds (CB) instead of cash, but since it did not announce that the issued CB would be immediately canceled, it is analyzed that only the company's CB issuance volume will increase.

According to the Financial Supervisory Service's electronic disclosure on the 10th, GW Vitec announced on the 8th that it would transfer all 7,868,100 shares (70.45%) of JK Labs it holds to CEO Lee Jun-kyung of JK Labs for 4.9 billion KRW.

Previously, on the 10th of last month, GW Vitec purchased 70.45% of JK Labs' shares from CEO Lee Jun-kyung for 4.9 billion KRW. This contract was canceled about a month later.

JK Labs is a company mainly manufacturing and selling LED TVs. It has its own brands Sentio and MAI TV. Last year, it recorded sales of 57.4 billion KRW and an operating loss of 900 million KRW, turning to a deficit. As of the end of last year, total assets were 27 billion KRW, total liabilities 22.9 billion KRW, and total equity 4.1 billion KRW, with a debt ratio of about 558%.

The company received a "qualified" audit opinion after its first external audit last year because it was unable to verify the quantity of basic inventory assets affecting financial performance and cash flow. For KOSDAQ companies, a qualified audit opinion results in trading suspension and delisting.

GW Vitec valued such a company at about 7 billion KRW and acquired its shares. The company estimated that despite not having operating profits exceeding 1.2 billion KRW in the past three years and turning to a deficit last year with a debt ratio exceeding 500%, JK Labs would record sales of 70 billion KRW and operating profits of 2.6 billion KRW over the next five years.

Additionally, GW Vitec made the payment for acquiring JK Labs' shares by issuing convertible bonds (CB) instead of cash.

The issued CB is the 19th series of bearer private placement CBs, with a nominal interest rate of 0%, maturity interest rate of 5%, and a conversion price of 1,815 KRW. The minimum conversion price adjustment (refixing) floor is 70% of the initial conversion price, about 1,275 KRW. Considering GW Vitec's current stock price is in the 800 KRW range, even the minimum refixing would result in a loss zone.

However, this CB includes a put option (call option) for 50% of the total issuance price, allowing someone designated by the company to gain profits if the stock price rises above the conversion price.

In response, the company did not announce that it would immediately cancel this CB but stated it would decide on the handling method at a board meeting to be held later. This is interpreted as an intention to consider reselling the CB. Since GW Vitec has been continuously issuing CBs after flooding the market with large-scale CBs and bonds with warrants (BW) earlier this year, potential supply has further accumulated amid a declining stock price.

When asked for a statement from GW Vitec regarding this matter, they did not respond.

This content was produced with the assistance of AI translation services.