Lunit swaps high-interest debt for $35.6M in new convertible bonds

What's the deal? Lunit, the South Korean medical-AI company, said on November 4 it will issue 47.7 billion Korean won (about $35.6 million) in new convertible bonds to refinance existing high-interest debt.

Why now? The move comes roughly 11 months after Lunit raised US$177.3M through a shareholder-assigned rights offering in January. That earlier raise was meant to address early redemption requests from existing CB investors.

What's the deal, continued? The swap lowers the cost of Lunit's debt. The old bonds carried a 1% surface interest rate and an 8% annual maturity guaranteed yield; the new ones carry a 0% surface rate and a 4% yield, eliminating regular interest payments.

The backstory: Lunit issued US$143.8M in CBs in May 2024 to buy Volpara Health Technologies, a breast cancer screening platform now called Lunit International. Repaying those bonds proved costlier than planned — actual outlays reached US$137.9M, US$55.3M over the initial estimate.

To date, Lunit has repaid or purchased US$117M, about 81%, of the original US$143.8M principal. Roughly US$26.8M remains.

What could go wrong? This is a repeat trip to the well. Chief executive officer Suh Beom-seok had called the January rights offering "Lunit's final capital raise" and targeted an EBITDA break-even point by year-end — yet the company returned for more funding 11 months later.

The signal: A company source said the issuance aims to refinance "acquisition financing under more favorable conditions to reduce financial cost burdens." The deal shows Lunit trimming the lingering cost of its Volpara bet while it works to stabilise its balance sheet and reach profitability.

Read more: chosun.com

Image credit: DFID - UK Department for International Development