Hon Hai Precision Industry Co (鴻海精密), the world’s biggest contract server maker, yesterday said the conversion price of its overseas bonds are set at NT$300 a share, representing a premium of 43.8 percent compared with the closing price of NT$208.5 on Thursday.
The company has raised US$700 million through the corporate bond offering, according to a company filing with the Taiwan Stock Exchange yesterday.
The convertible bonds were issued with a par value of US$200,000 and carry a zero coupon rate.
Photo: Ritchie B. Tongo, EPA-EFE
Hon Hai plans to use the proceeds to fund its raw material purchases from overseas, the filing said.
The issuance of the convertible bonds can cut interest costs, it said.
Hon Hai said the new bond issuance would have a very limited dilution effect, at about 0.54 percent, if all the bonds are converted to stock. The dilution effect should have a limited effect on existing shareholders’ rights, the company said in the filing.
The bonds are to be listed on the Singapore Exchange on Thursday next week with maturity date of Oct. 24, 2029, for bondholders to convert the bonds into common shares.
Prior to Hon Hai, Quanta Computer Inc (廣達), a server and notebook computer maker, and Wiwynn Corp (緯穎), a developer and manufacturer of artificial intelligence (AI) servers, also issued convertible bonds as a way to save interest costs.
Quanta last month raised US$1 billion through issuing convertible bonds overseas, while Wiwynn raised US$600 million to cope with increases in raw material purchases overseas due to expensive components used in AI servers.
Both companies’ bonds have a premium.
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