[Edaily Reporter Kwon Oh Seok ] KOSDAQ-listed company DENTIS CO.,LTD(261200)is raising market concerns due to its major shareholder’s use of stock-backed loans and a “round-robin” scheme involving convertible bonds (CBs). A massive “overhang” (potential selling pressure) risk has emerged as the major shareholder’s pledged shares overlap with the convertible portion of the CBs, and major institutional investors are also liquidating their stakes, further fueling investor anxiety.

According to the Financial Supervisory Service’s electronic disclosure system and the financial investment industry on the 3rd, DENTIS CO.,LTD CEO Shim Ki-bong has repaid a portion of the loan he secured using his shares as collateral. CEO Shim repaid approximately 200 million won of the existing 6.27 billion won loan to Korea Securities Finance Corporation and extended the maturity date to February 28, 2027. As a result, the remaining amount of the stock-backed loan has decreased slightly to 6.056 billion won.
The company explained that the loan proceeds were used to fund the acquisition of call options (the right to sell) on convertible bonds (CBs) issued in 2021. At the time, the initial issuance of CBs totaled 20 billion won, and call options could be exercised on 8 billion won—40% of the total. Of this amount, 6 billion won was allocated to CEO Shim.
This has led to criticism that the company took on excessive debt to defend the controlling shareholder’s management rights. In response, the company clarified, “This was not done for the sake of borrowing or investment, but to prevent the dilution of the controlling shareholder’s stake and to maintain stable management control.”
The total number of shares pledged by CEO Shim is 3,160,467, accounting for nearly 20% of the total outstanding shares. If the stock price falls and the value of the collateral declines, creditors may demand additional collateral or partial repayment of the loan. Failure to comply could result in a forced sale of the collateralized shares on the market by the financial institution.
The repayment plan for the outstanding balance remains unclear. The company stated, “It is difficult to provide specific details regarding the timing or method of repayment at this point,” adding cautiously, “We are reviewing specific plans regarding repayment, and some details are beginning to take shape.”
Another source of concern for the market is the recently issued 4th series of convertible bonds (CBs). This 8 billion won series of CBs is intended to repay the 10.5 billion won from the previous 3rd series of CBs. While the company maintains that this is intended to reduce the overhang and financial burden, the conversion price has dropped from 8,452 won to 3,102 won, causing the number of convertible new shares to skyrocket to 2,578,981. The total overhang—comprising the controlling shareholder’s pledged shares and the pending convertible bonds—amounts to 5,739,448 shares, exceeding 30% of the total issued shares.
The withdrawal of a major institutional investor—a fund affiliated with NH INVESTMENT & SECURITIES—is another factor that could affect investor sentiment. Last month, the “NH-Moolim Dental Care New Technology Fund No. 1” exercised its early redemption right (put option) for the convertible bonds, liquidating its entire holding of 1,774,547 shares of DENTIS CO.,LTD (10.09%) and walking away from the investment. While it is positive that these shares were extinguished rather than converted into common stock, the fact that a major financial investor (FI) has moved to recoup its investment could heighten market concerns regarding the company’s upside potential and financial stability.
In response, the company stated, “The company’s performance and profitability are clearly changing from what they were before. We have been consistently generating operating profit recently, and the company’s fundamentals are being strengthened through improved profitability.” They added, “The purpose of issuing convertible bonds is not merely to replace one debt with another, but rather a process to reduce the burden of existing convertible bonds and the overhang, and to build a more stable financial structure and management foundation.”
Meanwhile, DENTIS CO.,LTD’s second-quarter consolidated revenue was 32.136 billion won, and operating profit was 2.649 billion won. While revenue decreased by 0.8% year-over-year, the company returned to profitability.