Osstem Implant investors fear Kosdaq delisting over embezzlement disaster

Investors of Kosdaq-listed Osstem Implant Co. fear delisting after the stock became suspended for massive corporate embezzlement scandal.

Osstem Implant is currently under the Korea Exchange (KRX)’s review for the company’s eligibility to remain on the Kosdaq. The stock market operator suspended trading of Osstem Implant at 8:35 a.m. on Monday, right after the dental implant company disclosed it has pressed criminal charge against an employee for embezzling corporate fund worth 188 billion won ($157.7 million), which is tantamount to 91.81 percent of its equity capital.

KRX will determine whether to place Osstem Implant under delisting review by January 21. Delisting review would mean additional trading suspension period of between 20 to 35 business days, not to mention raising the possibility of the company’s removal from the secondary stock market.

Investors are dumbfounded as Osstem Implant is the No. 1 Korean dental implants maker with market capitalization of over 2 trillion won. Most wonder how the company could not have known of the criminal activity for months when 92 percent of equity capital has been embezzled.

Analysts do not believe Osstem Implant would be delisted. But the damage would be lasting on the stock.

Samsung Securities in a report published on Monday adjusted down its stock price target by 1.95 percent to 140,000 won.

Delisting will unlikely happen to protect investors and company, but stock price could lose due to loss of trust, said Samsung Securities analyst Seo Keun-hee. If the company is able to retrieve the embezzled money and minimize the financial damage, it will be able to book it as non-operating losses, added Seo.

Meanwhile, Osstem Implant’s trouble has spread to Dongjin Semichem Co., after it was revealed the suspected Osstem Implant employee had bought over 100 billion won worth shares of the electronic materials maker last year. The employee reportedly had sold Dongjin Semichem shares. Dongjin Semichem shares fell 1.71 percent to close at 45,900 won on Tuesday. The stock had lost 8.43 percent a day earlier.

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