[CB Crisis]⑪ Woojin B&G Exercises Put Option Despite Profit Turnaround and Subsidiary Listing

Improved Performance Boosts Equity Value
Stock Market Slump Causes Share Price Decline
Strong Moves to Secure Cash Lead to Active CB Put Option Exercises

[Asia Economy Reporter Hyungsoo Park] Amid rapid capital outflows from the domestic stock market, animal pharmaceutical manufacturer Woojin BNZ is partially repaying the principal and interest on convertible bonds (CB) issued three years ago. As the stock price fell below the conversion price, bondholders exercised their early redemption rights (put options). Woojin BNZ's performance in the first half of this year improved compared to the previous year, and the value of its holdings increased as its subsidiary was listed on the KOSDAQ market. It appears that investors' demand for cash has increased, leading to a decline in preference for mezzanine investments.

According to the Financial Supervisory Service's electronic disclosure system on the 24th, Woojin BNZ recently acquired and canceled 1 billion KRW worth of the 3rd series CB before maturity. Along with the principal, interest of 196 million KRW was also paid.

Previously, in October 2019, Woojin BNZ issued the 3rd series CB to domestic institutional investors, raising 2.7 billion KRW for operating funds and 7.3 billion KRW for acquiring securities of other companies. According to the CB issuance terms, if held until maturity, 122.6% of the principal will be repaid on October 14, 2023. Bondholders can request early redemption starting from April 14, 2021, which is 18 months from the bond issuance date. Thereafter, early redemption rights can be exercised every six months. The conversion price can be adjusted down to 70% of 3,753 KRW.

Woojin BNZ used the funds raised from issuing CBs along with existing cash to acquire a 62.22% stake (49,779 shares) in pet food company OSP for 14 billion KRW. OSP was recently listed on the KOSDAQ market. After listing, Woojin BNZ's shareholding decreased to 42.61%. Considering OSP's market capitalization is around 70 billion KRW, the value of the stake amounts to 30 billion KRW.

Woojin BNZ recorded sales of 24.4 billion KRW and operating profit of 1.8 billion KRW in the first half of this year. Compared to the same period last year, sales increased by 37%, and operating profit turned positive.

Despite strengthened fundamentals such as improved performance and increased value of holdings this year, the stock price fell by 14%. Compared to the KOSDAQ index, which dropped 33% during the same period, this is a relatively good performance, but the stock price remains below the conversion price. The interest rate on the 3rd series CB is 6%, slightly higher than the current market deposit interest rates following recent base rate hikes.

A financial investment industry official explained, "Even with similar interest rates, there is a tendency to consider deposits in banks more stable than corporate bonds," adding, "As redemption demands increase, movements to recover investment funds are active."

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