Kolmar Holdings moved to effectively secure management control by acquiring a large-scale convertible bond (CB) from WOOJUNG BIO, a contract research organization (CRO). The current management said it would resign, taking responsibility for weak results.
According to the Financial Supervisory Service on the 4th, WOOJUNG BIO disclosed the previous day that it decided to issue a 35 billion won bearer, coupon, unsecured private CB to Kolmar Holdings. The coupon rate is 0.0%, and the maturity yield is 4.0%. The conversion price is 2,325 won.
If the entire CB is converted into common stock, about 15.05 million new shares will be issued. That is comparable to the current number of shares outstanding (16.82 million). After conversion, the total number of shares will increase to about 31.88 million, and Kolmar Holdings will become the largest shareholder by securing 47.22% equity.
The current largest shareholder is Chief Executive Cheon Hee-jung, the eldest daughter of founder Chairman Cheon Byeong-nyeon, and the stake including related parties' equity is 33.61%. However, the equity ratio will drop significantly once the CB is converted. The two sides also agreed that, even before conversion, the voting rights of the existing largest shareholder would be delegated to Kolmar Holdings. For shareholder protection amid the change in control, Cheon and related parties will voluntarily lock up half of their roughly 5.58 million shares for six months and the other half for one year.
The conversion claim period runs from March 31, 2027, to Feb. 28, 2030. A put option allowing early redemption every three months is granted starting 18 months after issuance. However, given the strategic investment purpose, the right is viewed as a safeguard.
WOOJUNG BIO, founded in 1989, is a biotech that expanded from supplying specific pathogen-free (SPF) laboratory animals into nonclinical CRO services and hospital and research facility infection control (E&C) businesses. It merged with a special purpose acquisition company (SPAC) and listed on KOSDAQ in 2017. After Chairman Cheon's death in May last year, his eldest daughter, CEO Cheon Hee-jung, has led the company.
Recently, financial burdens have increased. As of the end of September last year on a consolidation basis, the liability ratio was 265.4%, up 43 percentage points from the end of the previous year. Borrowings increased due to building large-scale new drug cluster infrastructure and investing in next-generation technologies. Cash and cash equivalents stood at about 2.2 billion won, while short-term borrowings maturing within one year exceed 16 billion won. The potential exercise of the put option on the existing 8th CB (35 billion won outstanding) is also cited as a liquidity burden.
WOOJUNG BIO plans to use about 20 billion won of the funds raised this time to repay debt, with the remainder allocated to working capital and new business investment.
The company said, "Stable funding was needed to advance the nonclinical CRO business and pursue the new 'lab cloud' business based on open innovation," adding, "We selected Kolmar Holdings as the third-party allotment target after comprehensively considering shared understanding of the business and medium- to long-term growth strategy, and the potential for future cooperation."