Osstem Implant will issue 120 billion won ($84 million) in hybrid debt securities, or perpetual bonds. The company said it would use the proceeds to repay foreign-currency borrowings at its overseas units, cutting financing costs and exposure to currency swings, while also seeking a credit rating upgrade.
Osstem Implant said on the 21st that its board approved the issuance of 120 billion won in unregistered, interest-bearing, unsecured bonds — privately placed hybrid capital securities — at a meeting the previous day. Subscription and payment are expected on Nov. 30, with maturity set for Nov. 30, 2056.
The company said the issuance is intended to strengthen its financial health and lift its credit rating. Perpetual bonds can be classified as equity for accounting purposes, which lowers a company's debt-to-equity ratio.
The proceeds will be injected into the company's U.S. and Brazilian units to reinforce its business bases in North and South America. The funds will also be used to repay foreign-currency borrowings at those units to improve financial stability.
The company expects the issuance to bring its debt-to-equity ratio down to about 190% from about 240%. It also expects interest costs to fall as the burden of payment guarantees on overseas unit borrowings eases and relatively high-rate loans are repaid.
"This goes beyond simply raising funds. It is aimed at improving the borrowing structure of our overseas units to raise our creditworthiness and reduce financing costs and currency risk," an Osstem Implant official said. "On a stable financial footing, we will support the continued growth of our global business and enhance corporate value."