This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:29 p.m. on Jul. 3, 2026.
Whether Osstem Implant violated financial covenants on 1.2 trillion won in acquisition financing could become clear as early as this month. Based on last year's results, the company did not meet the covenant standards, but the final determination hinges on this year's first-half results. Whether to request a waiver of covenant application to avoid an event of default (EOD) also appears to depend on the preliminary first-half results.
According to the investment banking (IB) industry on the 3rd, the MBK Partners–UCK Partners consortium, the largest shareholder of Osstem Implant, injected 1.5362 trillion won in equity and 1.2 trillion won in acquisition financing when it acquired Osstem Implant in 2023. The acquisition financing agreement included financial covenants such as a leverage ratio. Under the covenants, the multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) to acquisition financing had to be kept at 6.25 times or lower, but based on last year's results it exceeded 10 times, surpassing the covenant threshold.
However, last year's results alone do not immediately confirm a covenant breach. The acquisition financing agreement includes a clause that, even if financial ratios are breached, if the lending group reassesses based on the next semiannual report and the standards are met, compliance is applied retroactively. Accordingly, first-half results this year are effectively expected to be the watershed for whether a waiver is requested. Osstem Implant submitted its semiannual report to the Financial Supervisory Service's electronic disclosure system on Aug. 14 last year. Given the company's size, the preliminary first-half results could come as early as this month.
Osstem Implant is said to be targeting about 139.1 billion won in EBITDA for the first half under its business plan, above the 123.9 billion won required by the acquisition financing covenants. With preliminary first-quarter EBITDA estimated at 52.6 billion won, the key is whether it secured 70 billion won or more in EBITDA in the second quarter.
The internal mood at Osstem Implant is said to be positive. The company reportedly believes it has a high chance of meeting the EBITDA required under the covenants, citing a recovery in domestic sales, expense efficiencies, and strong performance in the U.S. market. However, the final judgment could vary depending on the EBITDA calculation method accepted by the lending group. The scope of adjusted EBITDA recognition and whether to include one-off expenses are cited as variables.
There are also options in reserve to prepare for a potential covenant breach. At a briefing for the lending group in April, the consortium reportedly said that if a breach occurs, it could consider additional equity injections or selling the Songdo headquarters R&D center (Triple Tower). The book value of Triple Tower, completed last year, is about 237.5 billion won. If a sale of the Songdo headquarters materializes, it could be used as a source for debt repayment or as a way to improve the financial structure, but the sale is said to be less likely than other options.
The industry believes that even if a covenant breach occurs, it is unlikely to immediately lead to an EOD. This is because temporary deviations in financial ratios are often resolved through waiver negotiations between the lending group and the borrower. However, with Osstem Implant's acquisition financing reaching 1.2 trillion won, the lending group's conditions and the consortium's burden of response could vary depending on the first-half results.
An IB industry official said, "The key is how the lending group sets the criteria for calculating first-half EBITDA," adding, "If the covenants are met under those criteria, a significant part of the risk will be resolved, but if it falls short, it will likely lead to waiver negotiations."