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 500 billion won (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 23 billion won 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 270,000 won 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 243,500 won 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 5.5 trillion won 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 270,000 won 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
