LG Chem Issues $2 Billion Convertible Bonds to "Expand Future Growth Base"

On the 11th, LG Chem announced that it will issue $2 billion (approximately 2.6 trillion KRW) worth of foreign currency exchangeable bonds for the purpose of raising global investment funds.

LG Chem plans to primarily use the funds secured through this issuance for facility investments and operating capital to expand its future growth foundation.

Previously, LG Chem announced plans to invest a total of 10 trillion KRW by 2025, focusing on three new growth engines: eco-friendly materials, battery materials, and global new drugs.

The foreign currency exchangeable bonds issued by LG Chem will be denominated in US dollars. The maturities are 5 years and 7 years. The interest rates at maturity are expected to be 0.75?1.25% for the 5-year bonds and 1.35?1.85% for the 7-year bonds.

LG Chem is the largest shareholder of its subsidiary LG Energy Solution [373220], holding 81.84% of its shares. The exchangeable bonds will be exchangeable for LG Energy Solution common shares.

The exchange price will be based on LG Energy Solution’s closing price of 550,000 KRW on the 11th, with the 5-year bonds issued at a high premium of 25?30% per share and the 7-year bonds at 30?35% per share.

LG Chem stated that this reflects investors’ positive outlook on LG Energy Solution going forward. If all bonds are fully exchanged based on the stated amount, approximately 3,695,000 shares will be exchanged, which corresponds to about 1.6% of the total issued shares of LG Energy Solution.

The exact premium and issuance amount will be finalized on the morning of the 12th, depending on the results of investor subscription.

LG Chem expects to issue these foreign currency exchangeable bonds at an interest rate up to 4.6 percentage points lower than LG Chem’s 5-year foreign currency bond rate, based on its stable global credit rating (Moody’s A3) and LG Energy Solution’s future growth potential.

Through this, LG Chem anticipates benefiting from reduced financial costs by raising low-interest funds amid the global interest rate hike.

To enhance credibility and broaden its investor base, LG Chem has decided to list these foreign currency exchangeable bonds on the Singapore Exchange. Cha Dong-seok, LG Chem’s Chief Financial Officer (CFO), said, “It is highly meaningful that we successfully issued foreign currency exchangeable bonds under excellent conditions, recognized for future growth potential despite the global high-interest rate environment. We will continue to thoroughly prepare to secure future growth engines.”

This content was produced with the assistance of AI translation services.