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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] GC Biopharma has improved profitability but continues to shoulder a growing debt burden, raising market attention ahead of its upcoming corporate bond issuance.
According to investment banking sources on March 3, GC Biopharma plans to conduct book-building on March 4 for KRW 100 billion (approximately USD 75 million) in corporate bonds. The offering consists of KRW 40 billion in two-year notes and KRW 60 billion in three-year notes, with the possibility of increasing the size to as much as KRW 200 billion depending on investor demand.
Market participants say the success of the bond sale will hinge on investors’ assessment of the company’s financial stability. While securing the targeted amount is not expected to be difficult, the final coupon rate will likely reflect perceptions of rising leverage and financial risk.
GC Biopharma’s debt has steadily increased in recent years. Total borrowings rose from KRW 576.6 billion in 2022 to KRW 724.0 billion in 2023, KRW 828.1 billion in 2024, and KRW 1.0229 trillion as of the third quarter of 2025. Over the same period, the company’s debt-to-capital ratio climbed from 22.8% to 32.1%, exceeding the commonly cited 30% threshold for stable leverage. As of end-September last year, its debt ratio stood at 114.3%.
Although Korea Ratings and NICE Investors Service assign GC Biopharma an unsecured bond rating of A+ (Stable), several key financial metrics are viewed as being closer to BBB-grade levels. These include EBITDA margin, net debt-to-EBITDA, and EBITDA-to-interest coverage ratios.
The rising financial burden stems from continued capital expenditures on facilities and equity investments, coupled with higher working capital needs due to increased inventories. As a result, operating cash flow has not been sufficient to cover investment and operating expenditures.
The company has posted negative free cash flow (FCF) since 2023, recording net outflows of KRW 156.3 billion in 2023, KRW 115.4 billion in 2024, and KRW 44.3 billion as of the third quarter of 2025.
Negative FCF indicates that internally generated cash is insufficient to fund capital spending and operational needs, suggesting greater reliance on external borrowing or financial activities if investment levels remain elevated and cash generation does not recover.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
