[Reporter’s Prospectus Review] T&R Biofab to Issue 70% of Total Shares... Concerns Over Share Value Dilution

Paid-in Capital Increase of 40 Billion KRW...
22 Billion KRW Allocated for Debt Repayment
Yoon Wonsoo's Stake Drops from 18% to 10%

T&R Biofab is conducting a paid-in capital increase worth 40 billion KRW. As new shares equivalent to 70% of the total outstanding shares will be issued, dilution of share value appears inevitable. The company plans to use more than half of the funds raised for debt repayment and related purposes.

According to the Financial Supervisory Service's electronic disclosure system on August 5, T&R Biofab recently announced that it has decided to carry out a paid-in capital increase through a rights offering followed by a public offering of forfeited shares, in order to raise 40 billion KRW for debt repayment, operating capital, and facility investments.

As of August 4, T&R Biofab's market capitalization stood at 65.9 billion KRW, which is equivalent to 60% of its total market cap. In terms of the number of shares (22,021,511 shares outstanding), the new shares represent 72.22% (15,904,582 shares).

The stake held by the largest shareholder is also expected to decrease. Currently, the largest shareholder, CEO Yoon Wonsoo, holds an 18.84% stake. CEO Yoon plans to participate in the offering for only about 70% of his allotted shares, or 2,995,920 shares. Reflecting the sale of existing shares and the effects of bonus issues, his stake will decrease to 10.08%.

The reason for this large-scale fundraising is interpreted as being due to worsening business performance. Since its listing on KOSDAQ in 2018, T&R Biofab has continued to post losses. On an individual basis, the company has recorded losses for four consecutive years from 2020 to 2024. In the first quarter of this year, it posted revenue of 1.4 billion KRW and an operating loss of 2.9 billion KRW.

As a result, the debt ratio has continued to deteriorate, recording 93.4% in 2022, 220.0% in 2023, 306.6% in 2024, and 395.1% in the first quarter of 2025.

Accordingly, T&R Biofab will use more than half of the funds raised (22.4 billion KRW) for debt repayment. Of this, 5 billion KRW will be used to repay the first convertible bond (CB), and 17.4 billion KRW will be used to repay the second CB.

In its securities registration statement, the company stated, "The conversion prices of the first and second CBs issued are 15,501 KRW and 8,078 KRW, respectively, and considering the current share price level, there is a high possibility of redemption requests. We intend to allocate a portion of the funds raised to prepare for redemption requests for the remaining portions of the first and second convertible bonds."

8.6 billion KRW will be invested in strengthening clinical trials for bio-surgical solutions, expanding into overseas markets, and entering the overseas market for biodegradable artificial scaffolds. In addition, 3.4 billion KRW will be used for research and development (R&D) for the development of organoid and stem cell therapeutics, and 3 billion KRW will be used for operating capital and facility investments to expand K-beauty sales. The remaining 2.6 billion KRW will be used for operating capital.