Daehan Green Power, CB Resale... Possibility of Major Shareholder Change

[Asia Economy Reporter Jang Hyowon] It has been confirmed that SBW Life Science, an affiliate of Ssangbangwool Group, purchased convertible bonds (CB) of Daehan Green Power, which allow repricing (refixing) up to the par value, at a cost lower than the market price. From the day of purchase, Daehan Green Power's stock price rose, enabling immediate conversion of the CB into shares and realizing a profit. If all CBs are converted into common stock, the shareholder will secure a stake exceeding that of the largest shareholder, raising the possibility of a change in management control.

According to the Financial Supervisory Service's electronic disclosure on the 16th, Daehan Green Power announced that it will sell 10 billion KRW worth of its 31st series CB to GVBT No.3 Association and GVBT No.4 Association, each purchasing 5 billion KRW. The sale price is equal to the par value. A deposit of 500 million KRW was paid on the 8th, and the balance is scheduled to be paid on September 16.

Daehan Green Power issued this CB in September 2020 to its major shareholder, Daehan Green Energy. In December of last year, Daehan Green Power acquired and held the CB before maturity through two transactions. The conversion price is 768 KRW per share, approximately 12% lower than the current stock price in the 870 KRW range. On the day Daehan Green Power announced the resale of the CB, its stock price surged more than 15% by the close of trading. As a result, the CB purchasers realized an immediate valuation gain upon acquisition.

Moreover, the refixing limit of this CB is up to the par value of 100 KRW per share. Since this issuance predates the introduction of the CB refixing upward regulation, it is effectively a CB with almost no downside risk. Nevertheless, Daehan Green Power disclosed that it sold the CB to the associations at the face amount without receiving any additional premium.

Among the CB purchasers, GVBT No.4 Association is a fund invested in by SBW Life Science, an affiliate of Ssangbangwool Group. In February, SBW Life Science invested 10 billion KRW in GVBT No.4 Association, acquiring a 99.9% stake. At that time, SBW Life Science stated that the investment purpose was "to acquire equity in other companies for expanding domestic and international bio-business pipelines and strengthening competitiveness."

The representative partner of this association is Growth and Value Development. Growth and Value Development is a company wholly owned by Lee Hojun, an inside director of CBI, making it a special-related party of CBI's largest shareholder. CBI also purchased 19 billion KRW worth of Daehan Green Power's 30th series CB.

If the 31st series CB resold by Daehan Green Power this time is converted, 13,020,833 shares will be released into the market. This amount is close to the 13,557,049 shares (7.85%) held by the largest shareholder, Cormon Partners. If all the 30th series CB acquired by CBI and the newly issued 10 billion KRW 32nd series CB to the 'Growth and Value 14th Investment Association' by Daehan Green Power on the same day are converted, the largest shareholder could change.

In fact, Daehan Green Power resolved to convene an extraordinary general meeting of shareholders on September 16, the CB balance payment date. The agenda is the appointment of directors, with detailed appointment plans to be finalized later. Regarding this, a CBI representative stated, "The investor in GVBT No.4 Association, which acquired Daehan Green Power CB this time, is an additional financial investor (FI) attracted by Growth and Value, not SBW Life Science," adding, "Related details will be disclosed later."

Meanwhile, Ssangbangwool Group is under investigation by prosecutors for embezzlement allegations involving hundreds of billions of KRW by its management. The prosecution has obtained arrest warrants for former and current chairpersons who are reported to have left the country. Despite this situation, Ssangbangwool Group's merger and acquisition (M&A) activities continue. Prior to acquiring Daehan Green Power CB, Ssangbangwool Group affiliate IOK acquired KOSPI-listed Jayjun Cosmetic for about 27.5 billion KRW.

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