Kencoa Aerospace Issues 33 Billion Won Convertible Bonds... "0% Interest to Resolve Short-Term Overhang"

[Asia Economy Reporter Jang Hyowon] Kenko Aerospace announced on the 22nd that it has decided to issue the 9th anonymous secured non-guaranteed private convertible bonds (CB) worth 33 billion KRW to major mezzanine investors.

Kenko plans to allocate this fund to the exercise of Call Options for the 7th and 8th series, investing 12.4 billion KRW and 10.5 billion KRW respectively. The funds will be raised at a higher conversion price than the previously issued convertible bonds, and all bonds acquired through the Call Options will be fully redeemed. Through this, the company expects to resolve the overhang (potential supply) risk and maximize shareholder value.

Additionally, 10 billion KRW will be used as operating funds and production facility expansion funds to respond to increased orders for the second phase of the passenger-to-freighter (PTF) conversion project. Since the initial shipment of the Airbus A330 passenger-to-freighter second phase orders began in earnest last month, sales reflecting orders worth 120 billion KRW are expected from this year.

This convertible bond has a conversion price of 15,684 KRW, a zero percent coupon rate, and does not include a conversion price adjustment (Refixing) clause. Despite the challenging conditions, funds exceeding the initial set amount of 30 billion KRW were raised, with SK Securities Coverage Team 4 acting as the lead manager. At the request of investors, the company decided to increase the issuance by 10%, finalizing the amount at 33 billion KRW.

A company official stated, “Despite the stringent conditions, many investors highly evaluated the company’s future value, resulting in substantial funds being raised,” and added, “By fully redeeming the Call Option bonds of previously issued convertible bonds, we will enhance shareholder value and do our best to increase company value through principled management.”

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