[Funding] Alvogen Korea Group Secures 160 Billion KRW Refinancing Using Stock Collateral

[Asia Economy Reporter Lim Jeong-su] Alvogen Korea and its holding company Alvogen Korea Holdings have successfully refinanced their existing borrowings.

According to the investment banking (IB) industry on the 14th, Alvogen affiliates recently signed a credit line agreement worth 160 billion KRW with a lending consortium consisting of Korea Investment & Securities, Shinhan Bank, and others. The loan maturity is three years, with some loans to be repaid in five installments, and the remainder to be repaid in a lump sum at maturity. Early repayment of 1 billion KRW or more is also possible on interest payment dates, which occur every three months.

The lending consortium imposed a condition that if Alvogen affiliates secure cash through a paid-in capital increase or subordinated borrowings, they must prioritize repaying the loan amount equivalent to the funds raised. Accordingly, Alvogen affiliates cannot raise funds through paid-in capital increases or subordinated borrowings before repaying the borrowed funds this time.

2019 Alvogen Korea-Jongkundang Mushilon Domestic Distribution Contract Signing Ceremony

This is interpreted as a condition requested by the lending consortium to secure repayment priority over other borrowings. At the same time, Alvogen Korea Holdings provided its shares in Alvogen Korea as collateral for the loan. This condition has been maintained throughout multiple refinancing processes since Alvogen affiliates first borrowed funds from banks and securities firms. Alvogen Korea Holdings holds 100% of Alvogen Korea’s shares.

An IB industry official said, "If Alvogen Korea conducts a paid-in capital increase, the value of the shares in Alvogen Korea held as collateral by the lending consortium will be diluted," adding, "Therefore, it seems that the condition was set so that if a capital increase occurs, part of the funds must be used to repay the borrowings."

It is known that Alvogen affiliates plan to use most of the raised funds to repay existing borrowings taken out in March last year. At that time, the two companies received a 150 billion KRW loan with a three-year maturity under the same conditions.

Alvogen Korea, a foreign company, began operations in Korea after acquiring Geunhwa Pharmaceutical in 2012. Subsequently, in 2014, using funds raised through Geunhwa Pharmaceutical, it acquired Dream Pharma, which was owned by the Hanwha Group, and merged the following year to launch the current company.

Currently, it has a diverse product portfolio of about 200 products, including over-the-counter drugs like Mercilon, as well as specialized medicines for obesity, cardiovascular, urology, musculoskeletal, central nervous system, and oncology.

Meanwhile, Alvogen Korea, which was a listed company, was designated as a management item due to failure to meet stock distribution requirements and was delisted in 2019. There have been suspicions that Alvogen intentionally caused Alvogen Korea to voluntarily delist.

This content was produced with the assistance of AI translation services.