LNC Bio's shares fell more than 12% in early trading following the announcement of a rights offering worth 1.4 trillion won.
As of 9:44 a.m. on August 3, LNC Bio's stock was trading at 45,300 won, down 6,600 won (12.72%) from the previous trading day, according to the Korea Exchange.
On July 31, LNC Bio disclosed plans to issue 3.7 million common shares through a rights offering and a public offering for any unsubscribed shares. The planned issuance price is set at 38,000 won per share, which is 26.8% lower than the last closing price of 51,900 won. The record date for the new share allocation is September 4, with payment due on October 22.
Market analysts attribute the decline in investor sentiment to concerns over share dilution from the large new share issuance and the discounted offering price.
The company plans to allocate 1.05 trillion won of the raised funds for facility investments. This includes establishing a global smart factory in Dongtan, expanding production lines for human tissue and medical devices, building facilities for products based on human adipose tissue, introducing smart factory and automation equipment, enhancing global quality management systems, and securing raw materials. The remaining funds will be used for operational expenses and debt repayment.
This investment is part of a strategy to respond to domestic regulatory changes regarding the use of human-derived adipose tissue. LNC Bio initially aimed to establish a production base in the United States but shifted its focus to domestic production following recent amendments to regulations allowing the use of human-derived fat as medical materials.
To enhance shareholder value, the company will conduct a 1-for-1 free share issuance alongside the rights offering and plans to buy back and retire convertible bonds (CB) worth 15 billion won at cost through the exercise of call options, aiming to mitigate potential share dilution and overhang concerns.
* This article has been translated by AI.
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