이 기사는 2020년 04월 10일 08:00 thebell 에 표출된 기사입니다.

Kolmar Korea, a cosmetics original development manufacturer (ODM), plans to refinance its acquisition debt in a move to take advantage of ultra-low interest rates.

Kolmar Korea has appointed Samsung Securities to lead an effort to refinance 480 billion won of debt dating to its acquisition of CJ Healthcare (now HK inno.N) in 2018, sources familiar with the matter said Tuesday. Back then Kolmar Korea raised total 600 billion won to finance the acquisition and has repaid 60 billion won worth of debt each year through dividends for the last two years.

This refinancing would reduce the company’s borrowing costs significantly, with the interest rate for its debt reduced from 4.32 percent to 3.5 percent. This is partly due to a 50 basis-point rate cut announced by Bank of Korea last month.

A large reduction in borrowing costs is also attributed to CJ Healthcare’s improved earnings. Revenue of the company for 2019 rose more than 10 percent year-on-year to 542.6 billion won, while operating income increased more than 50 percent to 85.3 billion won. The revenue increase was led by growth in sales of K-CAB, a drug for gastroesophageal reflux disease (GERD), which was launched last year. For 2019, revenue from K-CAB was 34.7 billion won, the largest among all pharmaceutical products produced by the company.

Reduced debt and lower borrowing costs would help Kolmar Korea improve its financial position, which has been weakened after the acquisition of CJ Healthcare. Kolmar Korea bought CJ Healthcare for about 1.3 trillion won, of which 900 billion won came from external sources. This resulted in a sharp increase in liabilities and a downgrade of its credit rating from A0 to A-.

Kolmar Korea is also in talks with IMM Private Equity to sell non-core pharmaceutical assets. The latest balance sheet data showed that Kolmar Korea had short-term borrowings of 409.5 billion won and long-term debt of 739 billion won on a consolidated basis. The possible sale of non-core assets, combined with the refinancing, would likely reduce the company’s total debt to about 650 billion won.

“The refinancing arrangement will likely go smoothly given ultra-low interest rates and CJ Healthcare’s improved earnings,” an industry insider said.

(By reporter Jo Se-hun)