[비즈한국] PeopleBio304840, a developer of dementia diagnostic kits, has managed to catch its breath after narrowly avoiding a capital impairment crisis. In the process of acquiring 89 billion won worth of real estate in Daechi-dong, the company succeeded in issuing 27 billion won in convertible bonds, thereby increasing its capital. However, critics point out that this is merely a stopgap measure, as the company has also taken on 62 billion won in debt.
On the 12th, PeopleBio signed a contract to acquire land and buildings at 999-8 Daechi-dong, Gangnam-gu, Seoul, from RealityGen, a non-residential real estate management company. The total acquisition price is 89 billion won. Of this, 27 billion won will be settled by issuing convertible bonds to RealityGen, which will be incorporated into capital. When combined with the 9 billion won from Eastern Networks and 4 billion won from RealityGen via third-party paid-in capital increases, PeopleBio has successfully secured a total of 40 billion won in strategic investment, strengthening its financial stability. As of the end of June, the company had a capital impairment rate of 62.8%, putting it at risk of being designated as an administrative issue if it could not bring the rate below 50% by the end of the year; this deal resolves that immediate concern.
However, since the remaining 62 billion won of the purchase price will be reflected as debt, doubts remain as to whether the company's financial health has truly improved. Reflecting this as debt means that PeopleBio is assuming the loans that RealityGen had secured against the land and buildings. If the 62 billion won is counted as debt and the 27 billion won in convertible bonds as capital, the debt-to-equity ratio becomes 271.97%; while this is lower than the 657.81% recorded in the first half of this year, it remains high. While the immediate risk of being designated as an administrative issue has been avoided, a decline in the company's credit rating appears inevitable. Furthermore, although management rights and the status of the largest shareholder were transferred to Eastern Networks, only 13 billion won in actual cash was injected into the company. A PeopleBio official stated, "Since it is a secured loan on a building, it doesn't have to be repaid immediately, so it's appropriate to view it as an increase in general liabilities and assets."
Controversy also surrounds the fact that both the largest shareholder, Eastern Networks, and the seller of the land and buildings, RealityGen, are 100% owned by CEO Yoo Se-kwon. Essentially, RealityGen offloaded 62 billion won in debt and obtained 27 billion won worth of convertible bonds in PeopleBio, while Eastern Networks acquired PeopleBio for 9 billion won and effectively gained control of the land and buildings at 999-8 Daechi-dong.
The site is adjacent to Eastern Networks, an IT infrastructure company that became the largest shareholder through this third-party capital increase, making it highly likely the land will be utilized for its business. Eastern Networks provides various solutions such as servers, storage, HCI, virtualization, and Linux to clients including Dell and SK Hynix000660. Eastern Networks plans to build an AI-based healthcare and bio-data platform using PeopleBio's dementia diagnostic technology. A PeopleBio official said, "I understand it is planned to be used as a site for an AI data center."
However, although the land and buildings acquired by PeopleBio are appraised at tens of billions of won, they do not appear easy to utilize immediately. While temporary walls have been installed at the site as if construction is underway, there is no information about the contractor or architect typical of such projects, and the building is currently non-functional. A local merchant said, "I understand that construction was halted due to bankruptcy after they started building it." The site, which has a land area of 1,192.1㎡ and a total floor area of 874.94㎡, is designated as a Type 2 general residential area. As of January this year, the individual officially assessed land price was 16.56 million won per square meter, and its last recorded transaction was for 61.6 billion won in February 2022.
PeopleBio is a company that develops kits to diagnose dementia based on blood samples and has received approval for its dementia diagnostic kit 'AlzOn' in Korea and the Hainan medical special zone in China. However, the company has continued to report operating losses since its KOSDAQ listing in December 2020. Following revenue of 600 million won and an operating loss of 7.2 billion won in 2021; revenue of 4.4 billion won and an operating loss of 11.7 billion won in 2022; revenue of 4.5 billion won and an operating loss of 15.2 billion won in 2023; and revenue of 3.7 billion won and an operating loss of 11.5 billion won in 2024, it recorded revenue of 1.5 billion won and an operating loss of 4.6 billion won in the first half of this year.