Invoice Arrives After 2 Years for Amicogen, Which Made a Large-Scale Investment

Plan to Raise 70.3 Billion KRW Through Rights Offering
50 Billion KRW to Repay Convertible Bonds Issued 2 Years Ago
Funds Raised via Convertible Bonds for B피도 Acquisition... Scheduled for Repayment After 2 Years

Amicogen, which made a large-scale investment two years ago, is now pushing for a large-scale rights offering. After issuing convertible bonds (CB) to raise funds for acquiring Bifido, the possibility of early redemption claims increased, leading the company to issue new shares to shareholders to secure funds for repayment.

According to the electronic disclosure system of the Financial Supervisory Service on the 30th, Amicogen will conduct a rights offering followed by a general public offering of forfeited shares, issuing 0.394 new shares per existing share. The planned issue price for the new shares is 9,130 KRW, with a total of 7.7 million shares to be issued, raising 70.3 billion KRW.

Of the raised funds, 20.3 billion KRW will be used for facility investment, and 50 billion KRW will be used to repay debt. Specifically, 15 billion KRW and 4 billion KRW are allocated for constructing the Incheon Songdo medium (Baeji) factory and the Jeonnam Yeosu resin factory, respectively.

When the board resolved the capital increase, the expected issue price per share was 12,430 KRW. The plan was to raise 95.7 billion KRW and use over 45 billion KRW for facility investment, but due to a decline in stock price, the initial expected issue price was lowered. Since the debt repayment amount could not be reduced, the facility investment budget was cut. As of the first half of this year on a consolidated basis, liquidity, long-term debt, and short-term borrowings amounted to 104.7 billion KRW, accounting for about 64.2% of total borrowings. The debt ratio stands at 163.8%, and the debt dependency ratio is 36.1%.

Previously, in June 2021, Amicogen issued its "1st Private Placement Convertible Bonds" to raise 50 billion KRW. The first early redemption claim date for the convertible bonds is December 29 of this year. The conversion price is 29,087 KRW, which is higher than the current stock price of 12,700 KRW. Amid deteriorating investment sentiment in the bio sector in the second half of last year and recording large losses, Amicogen's stock price fell nearly 40% over one year. As the stock price declined, the possibility of early redemption increased rather than conversion to common stock.

Last year, Amicogen recorded a net loss of 45.8 billion KRW. Although the operating loss on a consolidated basis was only 4.9 billion KRW, this was due to reflecting financial costs of 30 billion KRW and investment losses in affiliates of 23.5 billion KRW.

Amicogen acquired a 30% stake in the KOSDAQ-listed company Bifido for 60.1 billion KRW based on funds raised by issuing convertible bonds in 2021. The acquisition was expected to create synergy effects in the microbiome and probiotics fields. The acquisition price per share was 24,500 KRW, set 45% higher than the base price considering the management premium. However, Bifido's stock price declined over two years, reducing Bifido's book value from 51.1 billion KRW in 2021 to 31.3 billion KRW at the end of last year.

Having acquired Bifido through issuing convertible bonds, Amicogen has faced difficulties since last year. Ultimately, Amicogen decided to find a breakthrough through a rights offering. About 50 billion KRW of the funds raised through the rights offering will be used to respond to early redemption claims on the convertible bonds. For other short-term borrowings, approximately 39 billion KRW in cash, cash equivalents, and short-term financial products held will be utilized. Plans also include negotiating with financial institutions for maturity extensions.

Shin Yong-cheol, chairman and largest shareholder of Amicogen, will acquire about 20% of the allocated shares using his own funds. If the largest shareholder acquires the new shares as planned, the shareholding ratio after the rights offering will decrease to 10.5%.

Amicogen expects that after completing the capital increase, its financial structure will improve along with better performance. In the first half of this year, sales reached 77.8 billion KRW, a 25% increase compared to the same period last year. Operating profit turned positive at 700 million KRW. Daol Investment & Securities estimates that Amicogen will record sales of 160 billion KRW and operating profit of 5 billion KRW this year, representing an 11% increase in sales and a turnaround to operating profit compared to last year.

Jonghyun Park, a researcher at Daol Investment & Securities, explained, "The medium and resin factories for bio materials are scheduled to be completed by the end of this year," adding, "The annual production capacity will be approximately 300 billion KRW and 160 billion KRW respectively, and from the first quarter of next year, the business value will be recognized due to the localization of bio materials."