LS Cable raises $370M in zero-coupon bonds to fund North America push
What's the deal? LS Cable & SystemDealroom has a profile for this one. Try Dealroom → issued US$419.2M (roughly $370 million) in exchangeable bonds to fund its North American expansion. The bonds are backed by equity in its listed subsidiary Gaon CableDealroom has a profile for this one. Try Dealroom → and were underwritten by KB SecuritiesDealroom has a profile for this one. Try Dealroom →, Kiwoom SecuritiesDealroom has a profile for this one. Try Dealroom →, and asset managers tied to Kiwoom and Mirae AssetDealroom has a profile for this one. Try Dealroom →.
How it works: LS Cable set the bond's coupon and maturity rate at 0%, effectively borrowing at zero interest. With three-year corporate bonds (AA-) yielding 4.688% on September 11, the company saved about US$19.3M in annual interest, according to CHOSUNBIZ.
The catch: Investors got a call option to swap the bonds for 1,851,851 Gaon Cable shares at US$226.4 each. If Gaon Cable closes above 150% of that price for 10 straight trading days, bondholders can convert from the November 9 issue date. Gaon Cable closed at US$204.2 on September 14.
Why now? LS Cable is chasing demand from US data centre buildout. Through its US arm LSCUSDealroom has a profile for this one. Try Dealroom →, Gaon Cable supplies power cables and bus ducts — power distribution units used inside data centres — to big tech firms.
The expansion: Gaon Cable is the only South Korean company running a power cable plant in the US, and it is scaling up there. By late August, it had signed long-term supply agreements worth more than US$4.61B in bus ducts with five big tech firms, per KB Securities.
What's the endgame? Bus ducts carry higher margins than traditional cables — 15% versus 2 to 3%, KB Securities estimates. The firm expects Gaon Cable to grow in both bus ducts and AI data centre distribution cables.
What could go wrong? The bond's zero-interest terms hinge on Gaon Cable's share price rising. Investors are betting on gains above the US$226.4 exchange price, which sat below the September 14 close.
The signal: At roughly $370 million, this ranks near the 92nd percentile of all post-IPO convertible rounds in South Korea. It shows how established firms are tapping subsidiary equity — rather than expensive debt — to bankroll the race to supply AI data centre infrastructure abroad.
Read more: biz.chosun.com
Image credit: ddgenome
