ABL Bio announced after the market closed on the 14th that it decided to convert all of its convertible preferred shares (CPS) into common shares.
ABL Bio's 5,778,196 shares of preferred stock will be converted into common shares and are set to be listed on the 28th. The number of common shares will increase by 11.9% (5,778,196 shares) from the existing 48,796,899 shares to 54,575,095 shares.
ABL Bio conducted a third-party allocation capital increase last July to secure funding for the development of next-generation antibody-drug conjugates (ADCs). Through this process, it issued convertible preferred shares at a conversion price of 24,229 won, raising 140 billion won.
On this day, ABL Bio's common stock price closed at 65,300 won, leading convertible preferred shareholders to see a valuation profit rate of 169.5% (41,071 won). There have been continuous expectations that they could realize profits after converting to common shares. (☞ ABL Bio addresses overhang concern with 140 billion won convertible preferred stock to avoid price impact)
ABL Bio explained that it decided to convert all convertible preferred shares into common shares to alleviate concerns about overhang.
ABL Bio stated, "We have reached the conclusion that a 100% one-time conversion to common shares is the best solution to resolve overhang concerns," adding that "if only a portion is converted, the remaining amount of convertible preferred shares could lead to prolonged overhang issues and potentially limit stock price increases."
ABL Bio asserted that shareholders need not worry about overhang issues even after the preferred shares are converted into common shares. ABL Bio said, "The momentum for dual antibody ADCs (stock price upward momentum) has not even begun, and there is no incentive for ABL Bio shareholders to sell shares for cash," noting that "(convertible preferred) shareholders are likely to invest from a long-term perspective rather than looking to sell in the short term."
The market seems to lean towards the view that ABL Bio has alleviated its overhang burden. ABL Bio's shares fell 5.09% (3,500 won) to 65,300 won during regular market hours, but in the after-market, the stock price rose to 66,800 won as of 4:25 p.m., reducing its losses.