Hyundai Engineering & Construction will issue 500 billion won in convertible bonds (CB) to secure investment funds for businesses such as solar power and offshore wind.
On the 9th, according to the Financial Supervisory Service's electronic disclosure system, Hyundai Engineering & Construction held a board meeting that day and decided to issue 500 billion won in bearer, unsecured private convertible bonds. The entire proceeds will be used as operating funds. Specifically, they are to be injected into new energy businesses such as offshore wind, solar power, Small Modular Reactor (SMR), and large nuclear power plants.
Hyundai Engineering & Construction plans to use the funds raised through this CB issuance in two tranches of 250 billion won each this year and next year. As the slowdown in the domestic dwellings market and profitability pressures across the construction sector persist, the move is seen as a bid to secure growth drivers in new business areas such as energy infrastructure and nuclear power.
The CB underwriters are three institutions: NH Investment & Securities, Korea Investment & Securities Co., and Kiwoom Securities. NH Investment & Securities will underwrite 200 billion won, and Korea Investment & Securities Co. and Kiwoom Securities will each underwrite 150 billion won.
Both the coupon rate and the yield to maturity of the bonds are 0.0%. The structure repays 100% of principal in a lump sum at maturity without separate interest payments. The maturity date is July 7, 2031, and the subscription and payment date is July 7.
The conversion price was set at 150,607 won per share. This is a 15% premium to the reference share price calculated as of the day before the board resolution. The conversion request period runs from July 7 next year to June 7, 2031. If all conversion rights are exercised, 3,319,898 shares will be issued, equivalent to 2.98% of the total number of shares outstanding.
This CB does not carry call or put options or early redemption rights. There is also no separate adjustment clause for the conversion price in the event of a share price decline. For Hyundai Engineering & Construction, the structure secures long-term funds without interest burdens, while investors can capture capital gains by converting to common stock if the share price rises in the future.
Hyundai Engineering & Construction has recently been expanding energy infrastructure businesses such as nuclear power, SMR, and renewable energy as future growth pillars. This fundraising is also seen as a move to broaden its portfolio into energy and infrastructure, departing from a construction-centered business structure.