[Edaily Reporter KIM SAE-MI ] There is widespread speculation in the industry regarding Amicogen, Inc.(092040)’s plan to transfer management control to a newly established entity through a 10 billion won third-party private placement. The company has stated that it will provide shareholders with detailed information regarding the acquisition after the funds are paid in on the 15th.

Transferring Management Control to a Newly Established Company with 10 Million Won in Assets?…Rumors Abound

According to the Financial Supervisory Service’s electronic disclosure system on the 6th, Amicogen, Inc. signed an agreement on the 22nd of last month regarding changes in management control between its existing largest shareholder, Magapartners Investment Fund, and YK BioNova Holdings.

This agreement does not involve the transfer of existing shares held by the previous largest shareholder; rather, YK BioNova Holdings will acquire new shares by participating in Amicogen, Inc.’s third-party private placement. YK BioNova Holdings plans to acquire 8,554,319 common shares at 1,169 won per share. The total subscription amount is approximately 10 billion won, and the scheduled payment date is the 15th of this month. The new shares are scheduled to be listed on the 10th of next month, and all shares issued through the capital increase will be subject to a one-year lock-up period.

The key to this transfer of management control is the restructuring of the board of directors. According to the public disclosure, following the closing of the new share subscription agreement, an extraordinary general meeting of shareholders will be held to form a new board of directors, and YK BioNova Holdings will hold a majority voting right on the new board. Furthermore, upon completion of the additional investment, all registered officers and auditors nominated by the existing transferor will resign, and the board will be reconstituted with registered officers and auditors nominated by the transferee.

The market continues to raise questions about the identity and financial strength of the new acquirer, as YK BioNova Holdings is a newly established company founded in March of last year. Its largest shareholder is CEO Lee Dong-jin, who holds a 50% stake. The company’s primary business activities include professional, scientific, and technical services, as well as management consulting.

As of the end of last year, YK BioNova Holdings’ total assets and capital were both 10 million won, and the company reported no revenue. Based solely on the financial figures disclosed in public filings, doubts have been raised as to whether the company can pay the 10 billion won capital increase and maintain stable management control over Amicogen, Inc.

A bioindustry insider familiar with Amicogen, Inc.’s situation hinted, “YK BioNova Holdings is closer to a special purpose company (SPC) established for the acquisition than an actual operating company,” adding, “There is a separate entity that will drive future business operations.”

Prolonged Efforts to Sell Management Control… Difficulties Attracting Strategic Investors

Due

to Low Shareholding Ratio

Amicogen, Inc. has been pursuing

the sale of

its

management control

for a long time. This was necessary to secure liquidity as debt and mezzanine financing burdens accumulated during the company’s pivot to the bio-materials business, such as culture media and resins.

Consequently, founder Shin Yong-chul, former chairman of Amicogen, Inc., sought to secure external capital in the range of 90 billion to 100 billion won and transfer management control. However, when it became known that Kwangmu was being considered as an investor, the move faced backlash from minority shareholders. Ultimately, at an extraordinary shareholders’ meeting in February of last year, former Chairman Shin was removed from office, and representatives from the Minority Shareholders’ Alliance joined the board of directors.

Since then, the Magapartners Investment Consortium—composed of minority shareholders—has become the largest shareholder, but concerns have been raised that it is vulnerable in defending management control. This is because its stake stood at only 5.4% at the time of the consortium’s launch and had fallen to 4.13% by the end of March this year. Consequently, Amicogen, Inc. has been seeking to attract a strategic investor (SI) to stabilize management control.

However, the structure requiring investment to be secured through the issuance of 100% new shares—without the sale of existing shares—proved to be a stumbling block in negotiations. Unlike the typical M&A structure, in which the existing largest shareholder or management sells their holdings to secure a control premium, Amicogen, Inc. could only proceed with a new share issuance that injected funds directly into the company, placing a heavy burden on investors.

The decline in the stock price was another factor that worsened the conditions for the management control sale negotiations. Amicogen, Inc.’s stock price, which stood at 4,650 won at the close on February 26 of last year—the day former Chairman Shin was dismissed at an extraordinary general meeting—had fallen to 1,341 won as of the previous trading day, the 3rd. This represents a 71.2% drop over approximately one year and four months.

"Plans for Additional Investment in Place… Acquisition Structure to Be Disclosed After Payment of Rights Offering Proceeds"

The company cited the cooperation of its existing largest shareholder, the Maga Partners Investment Fund, as the key factor that made this deal possible. An Amicogen, Inc. official explained, “To transfer management control solely through the issuance of new shares, we needed the proactive cooperation of the existing largest shareholder,” adding, “Without the cooperation of the Magapartners Investment Fund, this transaction itself would have been difficult.”

Business synergies are also reported to have contributed to the success of this deal. The new investors are said to have had in mind the business synergies between Amicogen, Inc.’s biomaterials business—including culture media and resins—and the aesthetic and biopharmaceutical sectors.

Amicogen, Inc. has been working to restructure its business, focusing on core operations such as culture media, resins, and specialty enzymes. In particular, culture media and resins are key materials required for biopharmaceutical production—areas where the company has been pursuing localization and commercialization. The company expects that once revenue from these new businesses begins in earnest, its corporate value will recover and conditions for attracting additional investment will improve.

However, it remains to be seen whether this 10 billion won rights offering alone will fully resolve Amicogen, Inc.’s liquidity issues and meet its investment needs for new businesses. The company stated that it has plans for additional fundraising following the rights offering.

An Amicogen, Inc. official said, “We have plans for additional investments even after this capital increase,” adding, “We will arrange an opportunity to explain the overall acquisition structure and business direction to shareholders after the capital increase funds have been paid in.”