KDB Converts HMM’s Perpetual Bonds Worth 1 Trillion Won into Shares

Chairman Kang Seok-hoon of Korea Development Bank (KDB).

Korea Development Bank (KDB) and Korea Ocean Business Corp. (KOBC) have changed HMM’s perpetual bonds worth 1 trillion won into shares.

KDB said in a public notice on Oct. 20 the main creditor bank of HMM, the nation’s No. 1 container liner, exchanged convertible bonds (CBs) and bonds with warrants (BWs) worth 1 trillion won for shares.

The conversion increased KDB and KOBC’s stake in HMM from 40.6 percent to 57.9 percent.

In July, the two creditor institutions revealed a plan to convert the perpetual bonds worth 1 trillion won into shares in a public notice of putting up HMM for sale.

HMM shares plunged 5.64 percent over share dilution question on the same day.

A view of HMM’s containership.

KDB is in a process of disposing of HMM. KDB plans to select a preferred negotiator in a bidding for acquiring HNMM in November and strike a share purchase agreement.

Dongwon, Harim and LX business group are competing to acquire HMM. The three business groups have launched a two-month due diligence.

A view of KDB headquarters in Yeouido, Seoul. (Photos: KDB)

KDB Issues Global Bonds Worth $2 Billion

Korea Development Bank issued global bonds worth a combined $2 billion won (about 2,699 billion won) to global investors on Oct. 16, KDB said on Oct. 18.

The lender issued $1 billion worth of three-year maturity bonds - $700 million worth of bonds with a fixed rate and $300 million worth of bonds with a floating rate, $500 million worth of five-year maturity bonds with a fixed rate and $500 million worth of 10-year maturity bonds with a fixed rate.

KDB reduced the spread of the bonds to 35bp compared to an initial price guide (IPG).

The lender succeeded in issuing three- to five-year maturity bonds with competitive interest rates, compared to current interest rates.

In particular, KDB succeeded in attracting investor orders three times more than issuance amount in consideration of Korean bonds, recognized as safe assets amid geopolitical risks in the Middle East and spreading fluctuation of U.S. state bond interest rates.

KDB has solidified its standing as an institution in the sovereign, supernational and agency (SSA) segment as super blue-chip investors, such as central banks and international institutions accounted for 41 percent of the investors of the global bonds.

KDB plans to create favorable issuance conditions for Korean institutions by benchmarking the issuance of the global bonds.