Medical artificial intelligence (AI) corporations Lunit will carry out a paid-in capital increase of about 200 billion won. It is interpreted as a fundraising move to ease the burden of repaying the convertible bonds (CB) issued to acquire the U.S. subsidiary Volpara in 2024.
According to the investment banking (IB) industry on the 30th, Lunit is said to be set to disclose a decision on a shareholder-allotted paid-in capital increase worth 200 billion won the same day.
An IB industry official said, "I understand the fundraising focuses on removing the uncertainty of a possible exercise of the put option (early redemption claim)," adding, "It is a separate financing from the previously pursued 80 billion won CB and CPS (convertible preferred stock)."
In this regard, ChosunBiz asked Lunit whether this was true, but the company did not respond.
In May 2024, Lunit issued convertible bonds worth about 171.5 billion won to acquire the AI corporations Volpara. The timing for investors to exercise the put option on those CBs came due in the first half of this year. As a result, the market has continually discussed the possibility of additional fundraising by Lunit.
However, Lunit has drawn a line, saying, "There are no plans for a paid-in capital increase." The company has emphasized that, based on meetings with all 32 bondholders, there was no intention to exercise the put option.
Even so, the view in the industry is that Lunit's move to proceed with a paid-in capital increase this time stems from principal-and-interest repayment burdens emerging as an actual risk.
The current repayment burden exceeds 200 billion won. There were even reports that Lunit had failed to raise the initially planned 200 billion won. At the time, Lunit explained, "We have never officially mentioned 200 billion won, and even in meetings with investors, discussions were in the 60 to 80 billion won range."
If this paid-in capital increase is added to the financing using CBs and CPS, calculations suggest the total raise will exceed 250 billion won.
Recently, Lunit entered an emergency management regime and is tightening the reins on expense cuts. After carrying out a restructuring to reduce about 15% of its total workforce, the company is said to be planning to sharply scale back overall welfare budgets, including cutting staff meeting and travel expenses by 50%.
Its financial situation has passed the risk of being designated for administrative issues. Lunit kept its consolidated loss before income taxes at about 14.7 billion won in the third quarter of last year. Total equity was 164.7 billion won, putting the pre-tax loss ratio at about 8.9%. However, some note that if losses continue this year, concerns about an administrative designation could resurface.