 |
Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, South Korea – October 23, 2025 – The Financial Supervisory Service (FSS) has ordered Kwangdong Pharmaceutical to revise its disclosure related to the issuance of exchangeable bonds (EB) backed by the company’s treasury shares.
According to the FSS, the “Other matters for investors’ reference” section in the report submitted by Kwangdong on October 20 did not comply with disclosure regulations. The company had announced plans to issue ₩25 billion worth of exchangeable bonds, backed by 3,793,626 treasury shares, representing 7.24% of its total outstanding stock.
Kwangdong stated that Daishin Securities, the lead underwriter, would acquire the entire issuance with no resale plans. However, the FSS determined that parts of the disclosure were incomplete or potentially inaccurate, prompting the revision order.
Market observers have voiced concern that exchangeable bonds backed by treasury shares can effectively function as third-party allotment capital increases when the exchange rights are exercised — potentially diluting existing shareholders’ interests.
The FSS recently tightened disclosure requirements for such instruments, mandating that companies clearly state the issuance purpose and potential impact on existing shareholders when issuing EBs using treasury shares.
This marks the second case of an FSS correction order for EB disclosures, following a similar action against Taekwang Industrial in July 2025.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
