SK Hynix to raise $1.5 bn in exchangeable bonds

SK Hynix Inc., the world’s second-largest memory chipmaker, said on Monday it would raise $1.5 billion through exchangeable bonds (EBs) in a preemptive effort to secure funding before market liquidity dries up.

The bonds with seven years' maturity will be issued at 111,180 won ($84.6) apiece on April 11, above its shares' closing price of 87,200 won on Monday.

They can be exchanged into 17.76 million treasury shares from May 22, representing a 2.4% stake in SK Hynix, according to its regulatory filing. 

The proceeds will likely be used to build new facilities, buy components and pay its employees.

The bond issues, underwritten by Merrill Lynch, come after the company posted its first quarterly operating loss in a decade in the October-December period of 2022.

Last year, SK Hynix Vice Chairman and Chief Executive Park Jung-ho said it would cut its investment in 2023 by about half its 2022 spending of 19 trillion won and continue to slash production for a certain period of time.

That means it still needs several billions of dollars as capital expenditures this year.

Further, SK Hynix executives had said the company was experiencing a cashflow squeeze after incurring 600 billion won in one-off charges related to the worsened NAND business at its two overseas invested firms – Japan’s Kioxia and San Jose-based Solidigm.

To prepare against the worsening capital market, Samsung Electronics Co. agreed last month to take out a cash loan of 20 trillion won from Samsung Display Co. at an interest rate of 4.6% per annum for 30 months through Aug. 16, 2025. It plans to pour the money into its foundry business.

Write to Ik-Hwan Kim at lovepen@hankyung.com

Yeonhee Kim edited this article.