Taihan Cable & Solution (001440.KS) has raised 49 billion won ($35 million) in working capital through a corporate bond sale. The company had initially planned to raise 40 billion won but increased the offering by 9 billion won after book-building among institutional investors drew stronger-than-expected orders. The proceeds will be used entirely to pay for raw materials needed for cable production in the fourth quarter.
Taihan Cable issued 21 billion won of its 155-1 unsecured bonds and 28 billion won of its 155-2 unsecured bonds on the 22nd, for a total of 49 billion won, according to a regulatory filing with the Financial Supervisory Service's electronic disclosure system.
The 155-1 notes carry a two-year maturity and will be repaid on Sept. 22, 2028, while the three-year 155-2 notes mature on Sept. 20, 2029. Korea Ratings and Korea Investors Service both assigned an "A" credit rating to the two issues.
The final size was 22.5% larger than the 40 billion won originally planned. Taihan Cable had intended to sell 20 billion won each of the two-year and three-year notes but raised the total to 49 billion won to reflect the results of the book-building.
The company will use all of the 49 billion won as working capital, rather than for capital expenditure or repayment of existing debt. According to the detailed use-of-proceeds plan in its filing, the money will be paid to LS MnM and other suppliers for raw materials during the fourth quarter. Until those payments are made, the funds will be held in bank deposits and short-term financial instruments.
Cable makers buy large volumes of raw materials such as copper to produce cables, so working capital requirements for purchasing those materials rise as their business expands. Unlike investment funds used to build new plants or equipment, working capital covers day-to-day business activity such as buying raw materials and paying wages.
"The funds raised through this bond sale will be used solely for raw material purchases," a Taihan Cable official said.
