[Edaily Reporter KIM SAE-MI ] Olix Pharmaceuticals, Inc.(226950)is converting approximately 84% of the convertible preferred shares (CPS) it issued last year into common stock as soon as the conversion window opened. Since there are no separate selling restrictions on the common stock resulting from this conversion, the possibility of short-term supply-and-demand pressure remains.
Olix Pharmaceuticals, Inc. announced on the 1st that conversion requests for a total of 1,657,522 CPS shares were submitted over two days, from the 31st of last month to the 1st of this month. Applying the conversion ratio, a total of 1,662,789 newly issued common shares are scheduled to be listed on the 15th.
The CPS issued by Olix Pharmaceuticals, Inc. last August through a third-party private placement totaled 1,979,347 shares, valued at approximately 115 billion won. The conversion request period runs from the 29th of last month through August 28, 2030. Following this year’s capital increase, the conversion price was adjusted from the original 58,101 won to 57,916 won.
It is noteworthy that a large-scale conversion took place immediately after the conversion period began. Since CPS converted into common stock can be sold on the open market after listing, this provides institutional investors with the liquidity needed to recoup their investment. There are no separate lock-up periods or selling restrictions on these converted shares. However, the conversion of CPS does not automatically imply the immediate sale of shares; whether and when to actually sell is at the discretion of each individual institution.
The volume of conversion requests in this round amounts to 83.7% of the originally issued CPS. Following the conversion, 321,825 CPS shares remain. Of these, 197,901 shares are subject to the company’s call option, while the remaining 123,924 shares are held by overseas institutional investors who did not participate in this conversion request.
According to a comprehensive report by E-Daily, the 123,924 unconverted shares are believed to belong to the Brookdale Fund, managed by the U.S. asset management firm Weiss Asset Management. At the time of the CPS issuance last year, a total of 137,692 shares were allocated to the Brookdale Global Opportunity Fund and Brookdale International Partners. These funds also participated in Olix Pharmaceuticals, Inc.’s common stock capital increase in June of this year, investing an additional 670,000 shares at 149,599 won per share—a total of approximately 100.2 billion won.
The 123,924 unconverted shares are not subject to conversion restrictions. This means there remains the possibility of additional conversions in the future. However, considering that Weiss invested an additional approximately 100.2 billion won this year following its CPS investment last year, the current remaining CPS holdings are relatively small compared to this year’s investment amount.
No specific plans have yet been established for exercising the call option on the 197,901 CPS shares subject to the call option. An Olix Pharmaceuticals, Inc. official stated, “There are no specific plans yet for exercising the call option on these shares,” adding, “Whether to exercise the option and the timing will be determined after comprehensively considering the company’s overall circumstances.”
The 1,662,789 common shares set to be listed on the 15th are not subject to any separate lock-up period or selling restrictions, making them tradable on the open market. This means the potential for a selling overhang from existing CPS investors still remains. However, the company believes that the uncertainty associated with the large-scale, phased conversion of CPS over an extended period has been significantly reduced.
An Olix Pharmaceuticals, Inc. official emphasized, “This bulk conversion is the result of lengthy discussions with institutional investors regarding the timing of the conversion,” adding, “Now that the potential conversion volume and listing schedule have become clear, we expect that supply-and-demand uncertainty caused by repeated conversion requests will also be significantly alleviated.”
