NgeneBio shares plunge 25% on capital reduction and $224 million stock offering plan

 
Shares of NgeneBio tumbled after the company announced it will pursue a capital reduction and a stock offering at the same time.

According to the Korea Exchange, NgeneBio was trading at 1,226 won on the KOSDAQ as of 1:18 p.m. on the 28th, down 419 won, or 25.47%, from the previous session. The drop was widely attributed to concerns that a large capital reduction and a new share sale would dilute shareholder value and weigh on sentiment.
 
NgeneBio said it decided at a board meeting the previous day to issue 7.15 million common shares in a paid-in capital increase. The company aims to raise about 22.4 billion won, allocating about 17.3 billion won for working capital and 5.1 billion won to repay debt. The deal will be structured as a rights offering to existing shareholders, with any unsubscribed shares sold in a public offering.
 
The company will also carry out a free capital reduction to cover accumulated losses. The reduction ratio is 66.67%, consolidating three existing common shares into one. As a result, the number of shares outstanding will fall to 8,936,583 from 26,809,750. The record date for the capital reduction is June 24, and the listing of new shares is scheduled for July 13.
 
Market participants said the capital reduction is intended to improve the company’s financial structure, but the follow-on stock offering makes dilution of existing stakes unavoidable, adding pressure to the share price. They also noted that the heavy allocation to working capital and debt repayment suggests a focus on financial stability rather than growth investment.