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Pulmuone Headquarters (Photo courtesy of Pulmuone) |
[Alpha Biz= Paul Lee] Pulmuone Foods Co., Ltd. has returned to the capital markets to secure financing for the first time since its credit rating downgrade earlier this year. In June, Korea Ratings lowered the company’s issuer credit rating from A- to BBB+.
On August 20, Pulmuone issued KRW 50 billion (approx. USD 36 million) in privately placed subordinated perpetual bonds. The bonds carry a two-year call option period, with a step-up coupon structure. The initial coupon rate is set at approximately 5.9% per annum, which could rise to nearly 10% if the company does not exercise the call option after two years.
The proceeds will be used primarily for refinancing. Pulmuone faces upcoming maturities, including KRW 70 billion in Primary Collateralized Bond Obligations due on August 25 and KRW 20 billion in perpetual bonds with a call option date on October 31. These instruments, issued in October 2023, currently carry a 7.9% coupon with similar step-up conditions. In total, around KRW 90 billion in bonds must be refinanced or repaid by October.
As of June 2024, Pulmuone reported only KRW 11.8 billion in cash and cash equivalents (including financial and short-term investments) on a standalone basis, underscoring its reliance on refinancing to meet obligations. The company also faces KRW 158.5 billion in call option obligations due in 2025, in addition to KRW 50 billion in bond maturities, bringing next year’s refinancing requirements to more than KRW 200 billion.
Analysts note that Pulmuone’s weak credit profile limits its ability to tap the public bond market at scale. Korea Investors Service cited sluggish operating profitability and high financial leverage as the main reasons for its downgrade from A- to BBB+.
Despite these challenges, Pulmuone remains committed to stabilizing its financial structure through refinancing strategies while continuing to operate as a leading player in the food sector.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
