Fate of Osstem Implant stocks to be determined Tuesday

Osstem Implant headquarters in western Seoul / Yonhap

By Anna J. Park

The fate of Osstem Implant and its investors will be decided Tuesday, as the corporate evaluation committee of the Korea Exchange (KRX) is set to determine whether to resume stock trading of the dental implant manufacturer.

“Normally, the decisions by the corporate evaluation committee come after the close of a day's trading. Its decision on Osstem Implant is expected to be announced between 4 p.m. and 6 p.m. Tuesday, although there may be changes in the schedule,” an official at the KRX told The Korea Times.

Osstem Implant stocks have been suspended from trading since Jan. 3 to protect investors, following the announcement that the firm filed a lawsuit against an employee who allegedly embezzled some 200 billion won ($163 million) of company money.

In the middle of February, the bourse operator opted to forward the case for further deliberation to its corporate evaluation committee, which is set to decide the future of the company.

The KRX's corporate evaluation committee has three options: lift the current trading suspension immediately, allow a one-year grace period for the firm to make improvements or send the case to another decision-making body to decide whether it should be delisted.

However, the possibility of the committee opting for the delisting process is considered slim, as an audit report by a KRX-designated external auditor firm, which is expected to significantly influence the result of the KRX committee, turned out to take a positive stance on the company's financial status, after a thorough inspection of the firm.

The KRX committee is thus expected to choose either the immediate lifting of the trading suspension, or granting the grace period, during which the firm can improve its financial status, with the trading suspension continuing.

Market watchers expect the committee to look into whether the company is sound enough to maintain its business activities. Based on the documents submitted by the firm, the committee is expected to make a judgment on the firm's financial stability and management transparency.

Despite the embezzlement scandal, the company's status as the country's top dental materials manufacturer is pretty solid. The firm logged a net annual profit of 32 billion won even after factoring in the loss from the embezzlement case. The firm's annual revenue and operating profit hit all-time highs last year, recording 824 billion won and 143 billion won, respectively.

Hoping for a lifting of the current trading suspension, Osstem Implant restructured its management, introducing an audit committee and an ethics management committee and appointing independent directors whose numbers would be more than half of the entire board.

Calculated from the closing price of Osstem Implant's stock on Dec. 30 last year, the market cap of the firm stands at 2.03 trillion won. Over 62 percent of its stocks are owned by minor shareholders.