SK hynix said on the 28th it will exercise the "clean up call" right on the remaining portion of the foreign-currency exchangeable bonds (EB) issued in 2023. This means the issuer will proceed with an early redemption to end the creditor-debt relationship if the outstanding bond balance falls to 10% or less.
The face value (par) of the bonds subject to this acquisition is about 132.7 billion won. This amounts to 5.9% of the total aggregates issued (about 2.2377 trillion won). Investors can exchange their bonds for shares or receive cash redemption.
Given that the current share price is far above the exchange price, observers say investors are likely to choose a stock exchange. Therefore, the actual cash outflow from this decision is expected to be limited, and the impact on the company's cash liquidity will be minimal.
As for concerns about a temporary supply overhang from promoting a stock exchange of the remaining portion, analysts say the market impact will be extremely limited, considering that more than 90% of the total portion has already been converted.
With this decision extinguishing all remaining exchangeable bonds that had been outstanding, an accounting liability of about 133 billion won is projected to decrease and the borrowing fund ratio to decline.