Medytox, withdrawal of rights-related capital increase … how much money is available-Paxnet News

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[팍스넷뉴스 김새미 기자] As Medytox withdrew 166.6 billion won in paid-in capital increase, it is expected to face difficulties in fund management right away.

According to the Electronic Disclosure System of the Financial Supervisory Service on the 22nd, Medytox announced on the previous day that it would withdraw the concessionary capital increase that was decided in July. Medytox was committed to investor protection, but the market believes that the stock price of Medytox, which had been traded at 23,600 won, dropped to 183,900 won in one day due to the cancellation of the license from the Ministry of Food and Drug Safety. . It is also believed that the loss was inevitable for Medytox CEO Jung Hyun-ho, who decided to participate only 50% in the bequest.

In July, Medytox decided to spend 71.9 billion won, which is 55% of the 130.7 billion won gained through a rights offering. It was planned to use 38 billion won (29%) as debt repayment funds and 20.8 billion won (16%) as facility funds. On the 15th, Medytox recorded a 104.66% subscription rate and succeeded in a paid-in increase to shareholders. Last month, the final issue price was adjusted to 171,400 won, and the amount of funds to be raised as bequests increased from the previously planned 130.7 billion won to 166.6 billion won.

However, Medytox decided to withdraw the issuance of new shares through a rights offering through a resolution of the board of directors on the 21st. Accordingly, there was no fundraising of 166.6 billion won through a rights offering.

◆ Only short-term borrowings reaching maturity in the second half of this year are 99 billion won

This led to a red light on Medytox’s debt repayment problem. As of the first half of this year, Meditox’s cash and cash equivalents were only 43.2 billion won. On the other hand, total borrowings over the same period amounted to 150.3 billion won, of which short-term borrowings maturing in the third and fourth quarters of this year amounted to 90.9 billion won.

Medytox’s total debt was 150.3 billion won in the first half of this year, and its dependence on debt is 32%. Among them, short-term borrowings amounted to 110.9 billion won, accounting for 73.8% of total borrowings. Convertible bonds (CB) are also worth 27.3 billion won.

Medytox’s short-term borrowings consist of medium-term export growth, foreign currency borrowings, and operating funds. It was set in won, euro, and dollar through the Export-Import Bank of Korea and Citibank Korea. Most of the borrowings are at low interest rates of less than 3%, but most of them have maturities set this year. Immediately, short-term borrowings of 99.9 billion won in total, including 74.1 billion won in the third quarter of this year and 25.8 billion won in the fourth quarter of this year, will expire.

In the case of a 30 billion won privately funded CB issued at the end of May of this year to raise operating funds, the conversion request period begins at the end of May next year, so there is relatively little room. The conversion price is set at 143,000 won per share. As of the first half of this year, the carrying amount of CB is recorded at 27.3 billion won while adjusting the conversion rights.

◆ Risk of provision for bad debt for’half-splitting’ sales due to cancellation of item permission ↑

This year, Medytox received two notices from the KFDA that it would go through the procedure for canceling the product license on June and the 19th of this month. The cancellation of the permit, which the Ministry of Food and Drug Safety started to go through the procedure, targets all units of Meditoxin and includes Coretox, which further exacerbated the negative impact on sales. Medytoxin and Coretox accounted for 50.93% of sales as of last year.

The sales of Medytox will be cut in half when the effect of cancellation of product licenses for Meditoxin and Coretox by the Ministry of Food and Drug Safety begins to take effect. As of the first half of this year, Meditox’s sales amounted to 75.5 billion won. Medytox has already suffered a lot of damage to profitability, with an operating loss of 14 billion won in the first half of this year, including 9.9 billion won in the first quarter of this year and 4.1 billion won in the second quarter.

Another problem is that the risk related to provision for bad debts has increased due to the KFDA’s cancellation of product permission. In the first half of this year, Medytox’s total receivables, including accounts receivable, amounted to KRW 74.3 billion, and the provision for bad debts reached 28.42%. Due to the effect of the cancellation of the item permit, the possibility of delayed collection of trade receivables or incurring bad debts has increased.

Medytox recognized an additional KRW 3 billion in inventory valuation provision and KRW 3.3 billion in refund liability at the end of the first half of this year, taking into account the impact of the KFDA’s cancellation of product license in June this year.

◆ Operating expenses of 50 billion won… Litigation fees seem to remain the same

As of the first half of this year, Meditox’s sales and management expenses were 26.2 billion won. Including the 27.3 billion won in domestic and overseas lawsuits, the operating fund of Meditox is estimated to be 53.5 billion won on a semi-annual basis.

Operational costs from various lawsuits are expected to remain the same. This is because a lawsuit for the cancellation of this permit by the Ministry of Food and Drug Safety is also predicted.

There are a total of 15 cases in progress by Medytox, including 12 cases in Korea and 3 cases abroad. As of the first half of this year, it is estimated that a total of 12.5 billion won in domestic lawsuits and 14.8 billion won in the US International Trade Commission (ITC) lawsuits amounted to 27.3 billion won. Seon Min-jeong, a researcher at Hana Financial Investment, said, “Due to the ITC litigation, lawsuits were incurred of 8.4 billion won in the first quarter and 6.4 billion won in the second quarter.”

With the final judgment of the ITC litigation on November 6 (local time), the problem of overseas litigation costs is expected to be resolved. However, there was a burden of litigation costs due to additional litigation due to the cancellation of domestic permits. Medytox filed an administrative lawsuit to the Daejeon District Court on the 20th to cancel the manufacturing and sales orders for Medytox and Coretox by the Ministry of Food and Drug Safety, and filed a petition for suspension of execution.

◆ Breakthrough will be re-implemented?

In order for Medytox to solve the funding problem, it seems that it will have to resolve the urgent debt problem.

First, the maturity of short-term borrowings must be extended or the contract limit must be increased. Currently, the remaining amount of Meditox’s contract limit is 5,256 billion won, which is the situation where most of the contract limit has been met. There is also a plan to repay through additional borrowing.

In reality, it would be quite difficult to maintain the size of the debt in this way. This is because there is a high possibility that additional borrowing as well as extension of maturity will be rejected due to the recent cancellation of the KFDA’s permit.

An official in the credit industry said, “If the sales decline is simply due to the poor business environment, we can fully consider it, but it will be difficult to lend if it is subject to administrative disposition.” Because of this, the possibility of extending the maturity of the borrowing or allowing additional borrowings decreases.”

In the end, it is possible to raise funds by issuing CB or re-implementing a capital increase. Medytox is expected to raise funds sooner or later because it is expected to increase the necessary funds, such as a decrease in sales and additional litigation costs due to cancellation of licenses, as well as debt issues.

Medytox officials replied that “the future schedule is undecided” about the possibility of retrying the bequest, and “we cannot answer more than that.”

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