SK hynix has decided to issue exchangeable bonds (EBs) worth 2 trillion won abroad. The purpose of the issuance is to raise operating funds while a deficit is expected in the first quarter of this year following the fourth quarter of last year due to a prolonged slump in the semiconductor industry.
SK hynix announced on April 4 that it would increase the amount of the overseas EBs issued with treasury stocks as collateral to 2.2377 trillion won (US$1.7062 billion). The previous day, the amount of issuance of the EBs was disclosed at 1.9745 trillion won (US$1.5055 billion). But SK hynix changed the disclosure by changing issuance conditions afterwards. EBs are bonds that allow investors to exchange bonds for shares held by the issuing company after a certain period of time.
The subject of the exchange is 20,126,911 stocks (2.8 percent of the total number of stocks) held by SK hynix. The exchange price was set at 111,180 won (US$84.73), higher than the previous day’s closing price of 87,200 won (US$66.46), considering an exchange premium.
SK hynix will list the EBs on the Singapore Stock Exchange. Their coupon rate and maturity rate are 1.75 percent per annum. The maturity date is April 11, 2030, seven years after the issue date. However, early redemption is possible before maturity as there are the company’s early redemption right (call option) and bondholders’ early redemption right (put option).
Due to a slump in the semiconductor industry, Samsung Electronics is also trying to secure funds. Samsung Electronics recently borrowed 20 trillion won (US$15 billion) with a 4.6 percent interest rate from its subsidiary Samsung Display. It will also raise about 160 billion won (US$122 million) by increasing dividends from subsidiaries such as Samsung SDS and Samsung Electro-Mechanics.