BL Pharmtech Investors Exercise CB Conversion Rights After Stock Surge

The stock price of BL Pharmtech, a KOSDAQ-listed company, has surged more than tenfold in a short period since the beginning of this year. During this time, investors holding BL Pharmtech's convertible bonds (CB) exercised their conversion rights.

According to the Financial Supervisory Service's Electronic Disclosure System on February 27, the 'NextG Regional Innovation Industry Fund' and 'Sangsang Contents Investment Association', both investors in BL Pharmtech's 20th CB, requested conversion of a total of 1 billion won worth of CB into shares on February 6. Both funds are managed by NextG Investment as the general partner (GP).

The 20th CB was issued on October 30, 2023, in the amount of 2 billion won. Conversion requests have been possible since October 30, 2024. However, investors neither requested conversion to shares nor redemption, and instead continued to hold the CB until recently.

This is believed to be because the stock price of BL Pharmtech had been consistently weak. The conversion price per share for this CB is 1,625 won. However, BL Pharmtech's stock price continued to decline and even dropped to as low as 376 won earlier this year.

Its business results and fundamentals have also been poor. As of the end of the third quarter last year, BL Pharmtech recorded cumulative sales of 5.7 billion won and an operating loss of 1.7 billion won. The current ratio was also in the 60% range, indicating that its liquidity, in terms of assets recoverable within a year, was lower than its short-term liabilities.

Meanwhile, on January 22, a bio-specialized media outlet published an interview with BL Pharmtech CEO Park Youngcheol. In this article, CEO Park revealed that BL Pharmtech is negotiating technology transfer deals worth “trillions of won” with global pharmaceutical companies, based on its molecular adhesive platform technology.

Afterwards, BL Pharmtech’s stock price hit the daily upper limit on January 22 and closed at the upper limit for eight consecutive sessions. On February 10, it reached its highest point in about five years and four months since October 2020. In just about two weeks, the stock price soared from 575 won to 8,150 won, marking an increase of over 1,300%.

As the stock price soared, CB investors exercised their conversion rights. The new shares from this CB were listed on February 24. Considering rights short selling, BL Pharmtech shares could have been sold as early as February 20. On February 20, BL Pharmtech's stock price traded at 5,210 won at one point, up 4%, before closing down 7% at 4,625 won. If CB investors sold their shares at the day’s high, they could have realized a profit of approximately 220%.

Regarding this, BL Pharmtech CEO Park Youngcheol stated, "We recovered 8 billion won from investment assets in the fourth quarter of last year, so even if 2 billion won of CB is requested for redemption, there is no liquidity issue, and therefore no reason to intentionally release good news." He added, "While we cannot disclose the companies we are negotiating molecular adhesive platform technology transfer deals with due to confidentiality agreements, recent deals by other companies have been in the range of 1.5 trillion to 3 trillion won, which we have used as benchmarks."

Meanwhile, BL Pharmtech is currently designated as an investment risk and investment alert stock.

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