[At a Crossroads: Listed Company] Amicogen① Why 10 Billion Was Withdrawn from Embezzlement and CB Default Credibility

B피도 Faces CB Default Due to Embezzlement... Secures 10 Billion Won in Short-Term Loans
Amicogen Also in a Hurry but Has Not Returned 10 Billion Won

Amicogen, a KOSDAQ-listed company, has been confirmed to have borrowed 10 billion KRW from its subsidiary Bifido, which has experienced an embezzlement incident and defaulted on convertible bonds (CB). Bifido used short-term funds to repay the defaulted CB, but Amicogen has not returned the 10 billion KRW to Bifido.

According to the Financial Supervisory Service's electronic disclosure system on the 12th, Bifido had lent 10 billion KRW to Amicogen as of the end of the first quarter this year. After lending 10 billion KRW last year and receiving repayment, it lent another 10 billion KRW in the first quarter of this year.

Amicogen is a company developing special enzymes for pharmaceuticals and operates businesses in healthcare materials, brand business, and bio-pharmaceutical materials such as resin and media. An Amicogen official stated, "We borrowed 10 billion KRW from Bifido because we needed operating funds for facility investments in the media factory for biopharmaceutical production in Songdo and the resin factory for antibody purification in Yeosu, as well as for raw material purchases."

Additionally, Bifido has lent 5 billion KRW to PurioGen, a 100% subsidiary of Amicogen. PurioGen is Amicogen's resin development subsidiary. These funds were also used to build PurioGen's factory. PurioGen has no equity relationship with Bifido. Even if the factory generates profits, Bifido gains nothing from it.

Bifido is a company that manufactures and sells probiotic strains including Bifidobacterium and health functional foods containing these strains. Since Amicogen acquired it in September 2021, Shin Yong-cheol, CEO of Amicogen, has been managing it.

Bifido's financial situation is not very comfortable, as it has lent a total of 15 billion KRW to Amicogen and PurioGen. As of the end of the first quarter this year, Bifido's cash equivalents amounted to 1.8 billion KRW. Including short-term financial products worth 12 billion KRW, the total is about 13.8 billion KRW. More than 40% of its total current assets of 36.1 billion KRW are loans extended to Amicogen and others.

In particular, Bifido recently faced an embezzlement incident amounting to 8.1 billion KRW, which triggered the loss of benefit of term (EOD) on its CB. On the 27th of last month, Bifido disclosed that an embezzlement incident involving 8.1 billion KRW occurred by an employee in charge of financial operations. The embezzlement incident is a condition for immediate repayment of the CB.

As a result, a repayment request was made for 17 billion KRW of the 1st and 2nd tranche CBs, and Bifido faced a situation where it had to repay 17.3 billion KRW including interest. Unable to repay the CB with internal cash, Bifido urgently raised 10 billion KRW through short-term borrowings. Despite Bifido raising short-term borrowings, the parent company Amicogen did not return the 10 billion KRW.

This is analyzed to be because Amicogen itself is facing a mid-term repayment crisis on its CB. Amicogen issued CBs worth 40 billion KRW in July 2022. Although the current conversion price has dropped to the refixing limit of 8,037 KRW, Amicogen's stock price is trading in the 5,000 KRW range.

Industry insiders expect that the early redemption right for 24.1 billion KRW will be exercised first on the 20th. However, as of the end of the first quarter this year, Amicogen holds about 12.9 billion KRW in cash equivalents and short-term financial products combined. Moreover, it repaid exchangeable bonds (EB) worth 8.7 billion KRW in May, so cash is presumed to be even more insufficient.

Regarding this, an Amicogen official said, "Due to Amicogen's CB repayment issue, we could not immediately repay Bifido's loan, but we will repay it within this year," adding, "We are attracting new investors, including strategic investors (SI)."