LG Chem’s 500 billion won (US$443.85 million) bond issue has been more than five times oversubscribed, prompting the company to consider raising its offering to 1 trillion won (US$887.71 million).
A total of 2.64 trillion won (US$2.34 billion) worth of orders have been placed on LG Chem’s corporate bonds through the bond demand forecast system, which was closed on March 5, investment banking (IB) industry sources said.
The company’s bond issue of 500 billion won (US$443.85 million) in February last year was also massively oversubscribed.
The company planned to issue 100 billion won (US$88.85 million) worth of corporate bonds with a maturity of three years but attracted 810 billion won (US$719.68 million) of funds. It also planned to issue 200 billion won (US$177.70 million) worth of debt with a maturity of five years and 100 billion won (US$88.85 million) worth of seven-year bonds but it drew 890 billion won (US$790.76 million) and 400 billion won (US$355.40 million), respectively. The company said subscriptions totaled 540 billion won (US$479.79 million) for its corporate bonds with a maturity of 10 years. LG Chem is planning to raise the amount of bond offering to up to 1 trillion won.
The company will use the funds to expand its naphtha cracking center (NCC) facilities in Yeosu and linear low-density polyethylene (LLDPE) production facilities. LG Chem’s corporate bonds have an AA0 (positive) credit rating. The bond offering will be managed by KB Securities Co., NH Investment & Securities Co., Mirae Asset Daewoo Co. and Korea Investment & Securities Co.
LG Chem posted 2.25 trillion won (US$1.99 billion) in consolidated operating profit last year, down 23 percent from a year earlier. A company official said, “We had a lot of one-time costs, including routine maintenance of the Yeosu plant.”