[Funding] HK Inno.N Secures Comprehensive Liquidity to Repay Acquisition Financing

Corporate Bonds 100 Billion KRW · Short-term Borrowings 80 Billion KRW
Increased Acquisition Financing Repayment Burden During CKM Merger
High-interest Borrowings to Be Repaid to Reduce Interest Burden

[Asia Economy Reporter Lim Jeong-su] HK Innoen, a specialty pharmaceutical company and a subsidiary of Korea Kolmar, has launched an all-out fundraising effort to repay acquisition financing loans and secure funds for new investments. The company plans to issue 100 billion KRW worth of public corporate bonds and borrow 80 billion KRW in short-term loans.

According to the investment banking (IB) industry on the 14th, HK Innoen will issue 100 billion KRW worth of public corporate bonds. Additionally, it will borrow 50 billion KRW in short-term loans from financial institutions and issue 30 billion KRW worth of electronic short-term bonds. In total, the company will raise 180 billion KRW through borrowings.

The raised funds are expected to be used to repay acquisition financing borrowed during the process when CKM acquired HK Innoen. CKM invested a total of 1.3 trillion KRW to acquire HK Innoen. Approximately 700 billion KRW was secured from the parent company Korea Kolmar and three private equity funds (PEFs), and about 600 billion KRW was borrowed through acquisition financing.

After HK Innoen merged with CKM, the burden of repaying the acquisition financing became HK Innoen’s responsibility. During this process, the borrowings increased from around 200 billion KRW to approximately 700 billion KRW. This is about seven times the annual EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which is somewhat heavy relative to profitability.

HK Innoen used about 150 billion KRW, roughly 45% of the 334.9 billion KRW raised through new share issuance during its August listing on the KOSDAQ market, to repay acquisition financing. There remains a repayment or refinancing burden of around 600 billion KRW. The funds raised this time are also expected to be used to repay high-interest acquisition financing.

With the inflow of new capital during the KOSDAQ listing process, the financial structure improved. Accordingly, the conditions for raising funds for debt repayment and new investments also improved. Before listing, the company’s corporate bond credit rating was A- (stable), but with the improved financial structure after listing, the rating outlook changed to ‘positive.’

With improved creditworthiness, the interest burden on borrowings can also be reduced. An IB industry official predicted, "HK Innoen will be able to significantly reduce its interest burden by repaying high-interest acquisition financing with low-interest corporate bonds and short-term loans."

Related industry sources expect HK Innoen to continue increasing fundraising going forward. The company plans to invest over 100 billion KRW in constructing new research facilities in Pangyo Techno Valley 2, as well as maintaining the Osong factory and existing research centers. Additionally, costs related to R&D and clinical trials are expected to increase during the process of pursuing multiple pharmaceutical research and development projects.

An industry official said, "Considering HK Innoen’s improving performance trend, the planned new investment funding is not expected to pose a significant financial burden."