Bukwang Pharmaceutical (003000.KS) has finalized its acquisition of Korea Union Pharmaceutical, which is undergoing court-led rehabilitation proceedings. With the court's approval of the rehabilitation plan, Bukwang Pharm will secure management control through a 30 billion won capital increase.
Bukwang Pharm announced Thursday that the Seoul Bankruptcy Court approved Korea Union Pharmaceutical's rehabilitation plan. Bukwang Pharm has thus been confirmed as the final acquirer. The company will inject 30 billion won through a third-party allotment capital increase to acquire a 75.14% stake in Korea Union Pharmaceutical on the 28th. The acquisition will involve 60 million shares.
The 14th Rehabilitation Division of the Seoul Bankruptcy Court, presided over by Chief Judge Choi Mi-bok, approved the plan after determining that the rehabilitation proposal had been passed at a creditors' meeting held the previous day and that legal requirements had been met. The Seoul Bankruptcy Court had earlier convened a meeting of rehabilitation creditors and shareholders, during which the plan was reviewed and voted on, and supplementary rehabilitation claims were examined.
Under the rehabilitation plan, most secured rehabilitation claims will be repaid in cash. For unsecured rehabilitation claims, 67.6% will be converted to equity, while 32.3% will be repaid in cash. Most interest accrued after the start of the rehabilitation process will be waived, and existing rights under convertible bonds (CB) and bonds with warrants (BW) will be extinguished as of the approval date.
Along with the debt-to-equity swap of rehabilitation claims, a 3-to-1 capital reduction will be carried out on both existing and newly issued shares. Bukwang Pharm said it will effectively acquire Korea Union Pharmaceutical without any debt burden under the rehabilitation plan.
"Under the rehabilitation plan, we will acquire Korea Union Pharmaceutical with all debts settled," a Bukwang Pharm official said. "After the acquisition, we will work toward normalizing management and turning the company profitable."
