HD Korea Shipbuilding to Issue Bonds to Propel Hydrogen and Wind Power Initiatives

HD Korea Shipbuilding & Offshore Engineering, the intermediate holding company of HD Hyundai Group in the shipbuilding sector, has decided to issue the first tranche of exchangeable bonds (EB) worth 600 billion won. This strategic financial move, announced on Feb. 25, is set to bolster the company’s investment in innovative energy technologies, including hydrogen fuel cells, small modular reactors (SMR), and offshore wind power. The bonds, which will mature in five years and carry no interest, are exchangeable for 1,730,576 shares of HD Hyundai Heavy Industries, representing 1.9% of the total shares.

NH Investment & Securities and private equity fund manager IMM Credit Solution (ICS) have committed to investing 300 billion won each in these bonds. Investors will have the opportunity to exchange the bonds for common stock of HD Hyundai Heavy Industries from March 31 until February 2030. The exchange price is set at 346,705 won, a 12.57% premium over the stock price of 308,000 won on the announcement day. Additionally, investors are granted a put option, allowing them to request early repayment of the principal two years after issuance, providing a layer of security.

The company’s decision to issue these bonds is driven by its ambition to lead in innovative energy technologies. The funds raised will be directed towards research and development in hydrogen fuel cells, SMRs, and offshore wind power.

The issuance of exchangeable bonds, a sophisticated financial instrument, allows HD Korea Shipbuilding & Offshore Engineering to leverage its holdings in HD Hyundai Heavy Industries while securing capital for future growth. The inclusion of a put option provides a safety net for investors, enhancing the attractiveness of the bonds.
Source: Business Korea