Fundraising
SK Hynix will raise funds by issuing exchangeable bonds (EBs) worth US$1.5 billion (approximately 1.974 trillion won) in the Singaporean market.
SK Hynix announced on March 3 that it will issue EBs with a seven-year maturity and interest rates of 1.25 to 1.75 percent. The proceeds from the EB issuance will be used as operating funds, including those for the purchase of raw materials. Bank of America (BoA) is the lead manager.
EBs are corporate bonds that companies issue in exchange for shares of their subsidiaries or other companies at a certain price. SK Hynix EB investors will be able to exchange their EBs for SK Hynix common stocks from May 22 to April 1, 2030. The exchange price is more than 111,180 won, which is 127.5 percent of the closing price of the listed stock on that day. If the stocks are fully exchanged at that value, the total number of shares will reach approximately 17.76 million, or 2.43 percent of all of outstanding shares.
Meanwhile, SK Hynix has been significantly increasing its corporate bond issuance since the beginning of 2023. By the end of March, SK Hynix had issued a total of 1.39 trillion won (US$1.06 billion) in corporate bonds. This is the largest single issuance in Korean history. “SK Hynix had an excellent financial structure, with a consolidated debt-to-equity ratio of 64.1 percent and a net borrowing dependency rate of 17.7 percent at the end of 2022,” said NICE Investors Service in a report on SK Group’s financial health in March. “But its borrowings soared due to the acquisition of the NAND business division from Intel and the expansion of its capital expenditures. The chipmaker is expected to control the pace of its debt growth by reducing investment this year by less than half from 19.4 trillion won [US$14.8 billion] in 2022, but if the current slump in the semiconductor industry is prolonged, it will undermine the company’s financial stability more than expected due to accumulated losses and an increase in borrowings.”