Issued 99 Million New Shares to Raise 50 Billion Won
Major Shareholder Invests 25 Billion Won
All-Out Effort for Biosimilar Joint Development
Pharmaceutical distribution company AP Healthcare is planning a large-scale rights offering. The number of new shares to be issued amounts to 87% of the existing shares outstanding. Although the largest shareholder has promised financial support, the success of the subscription remains uncertain.
According to the Financial Supervisory Service's electronic disclosure system on the 10th, AP Healthcare will issue 99 million new shares to raise 50 billion KRW. The planned issue price per share is 505 KRW, and the final issue price will be confirmed on the 24th. The scale of the fundraising corresponds to 80% of AP Healthcare's market capitalization of 63.1 billion KRW.
AP Healthcare will invest the raised funds in developing the biosimilar of the autoimmune disease treatment drug "Humira" (AP096). Previously, on the 19th of last month, AP Healthcare signed a joint development agreement for AP096 with its largest shareholder, Aprogen. They agreed to jointly share development costs and distribute profits from product commercialization. The development cost sharing amount of 70 billion KRW will be paid in two installments. An initial payment of 35 billion KRW will be made by December 31. The company expects that if development proceeds as planned, it will start receiving sales revenue dividends from 2027 and fully recover the investment by around 2030.
Among the raised funds, 11 billion KRW will be used to repay the 6th series of bonds with warrants (BW) issued in July last year. The exercise price of the warrants is 857 KRW, which is more than 60% higher than the current stock price. An early redemption request for the remaining 21.7 billion KRW is expected. The need to secure funds by the first early redemption payment date in January next year has increased.
The reason AP Healthcare is conducting the capital increase through a general public offering, which has a high possibility of forfeited shares, is related to the timing of fund disbursement. According to the management plan, approximately 50 billion KRW will be needed between the end of this year and January next year. The general public offering process is relatively simpler than the rights offering method. AP Healthcare has planned to conduct the general public subscription over two days starting on the 28th and list the new shares on the 14th of next month.
Aprogen, the largest shareholder of AP Healthcare, and its related party Aprogen Biologics will invest 13.6 billion KRW and 11.4 billion KRW respectively, accounting for half of the 50 billion KRW fundraising target. Although the largest shareholder could have invested through a third-party allotment rights offering, the choice of a general public offering seems to be due to differences in the discount rate applied when determining the issue price. Under current law, the discount rate for general public offerings must be within 30%, while for third-party allotments it must be within 10%. AP Healthcare decided to apply a 20% discount rate when setting the issue price.
An industry insider in financial investment explained, "Considering AP Healthcare's market capitalization and cash equivalents held, the outcome of the biosimilar joint development contract is crucial," adding, "The need to raise an additional 35 billion KRW by the end of next year could also be a burden."
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