KOSDAQ biotech equipment company Micro Digital faces delisting from the market just seven years after its IPO. The refusal of opinion in its semiannual review report triggered a sharp stock price decline and forced sale of the founder's shares, putting the company's eligibility to remain listed under scrutiny.
According to the financial investment industry on the 6th, Korea Exchange announced via public disclosure on the 4th that it plans to decide by the 28th whether Micro Digital will be subject to a substantive listing eligibility review.
This measure follows a change in Micro Digital's largest shareholder, which was designated as a watchlist stock. The KOSDAQ market listing regulations specify that changes in control arising from watchlist stocks constitute one of the grounds for substantive review.
News of the largest shareholder change became known through public disclosure after market close on the 3rd. Micro Digital disclosed that Kim Gyeong-nam (CEO) lost all of its 19.83% stake (3,731,108 shares) and left the field for the subsequent largest shareholder blank.
Micro Digital stated, "The largest shareholder changed due to forced sale of pledged shares under a stock collateral loan agreement," adding, "As details on the second-largest shareholder are currently unavailable, we plan to issue a corrected disclosure after verification."
In May last year, Kim (CEO) obtained a stock collateral loan from a securities firm and repeatedly extended it. As disclosed in public information on July 3, the loan amount was limited to 749,359 shares as collateral and 2.47588 billion won in loan proceeds.
Starting with the public disclosure of opinion refusal in the semiannual review report after market close on the 31st last month, the stock price plummeted, leading to a decline in collateral value and continued forced sales, ultimately resulting in the complete disposal of Kim (CEO)'s holdings.
The stock price had fluctuated between 10,000 won and 11,000 won at the beginning of the year but fell sharply amid management difficulties, dropping to around 1,500 won just before the opinion refusal disclosure. Immediately following the disclosure, from the 1st of this month, it hit the limit-down price for three consecutive days, closing at 538 won on the 3rd.
Trading on the exchange has been suspended since the 4th (after market close on the 3rd), making losses inevitable for ordinary shareholders. According to the semiannual report compiled as of late June, there were 5,919 small shareholders who collectively held 48.5% of the shares.
With the direction of control still unclear, trading volume on the exchange was recorded at 890,000 shares on the 1st, 2.44 million shares on the 2nd, and 6.62 million shares on the 3rd, exceeding the volume of forced sales by Kim (CEO)'s side. Some market observers speculate that if a party accumulated large amounts of shares just before trading suspension, they could become the largest shareholder regardless of their actual intention to participate in management.
Micro Digital is a research equipment company founded by Kim (CEO) in 2002, producing products such as micro-absorption analyzers and disposable cell culture devices. It was listed on the KOSDAQ market in 2019.
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