KT secures $1 billion abroad

By Kim Yoo-chul

KT, the nation’s telecommunication giant, said Tuesday that it has issued a total of $1 billion in bonds to overseas investors.

The move came after the company failed to sell bonds to local investors following its wholly owned subsidiary KT ENS’s recent filing for court receivership.

The bond-issuance to overseas investors by a private company follows Samsung Electronics America’s sale of “global bonds” in 2012, said officials.

“Thanks to the issuance, it’s unlikely that KT will suffer from any financial bottleneck. Overseas investors still trust us and our fundamentals are strong,” said Juliana Kim, spokeswoman at the Bundang, Gyeonggi Province-based outfit.

Of the total, bonds worth $650 million have a three-year maturity, while the remaining $350 million carry a five-year maturity.

The issuance was managed by five lead banks ― BoA-Merrill Lynch, Citi Group, Deutsche Bank, Goldman Sachs and HSBC.

KT said $600 million of the total will be used to pay back bonds due on June 24. The remainder is going to be used for administrative and other internal purposes.

After local investors were reluctant to buy KT bonds ― as it has recently been grappling with a number of issues including a leak of client information, the restructuring of its human resources and business units and ENS’ petition for a court receivership in the Seoul Central District ― the firm looked to institutional investors in Hong Kong, the U.S. and Europe, according to a KT executive.

“The successful issuance will help local investors get a positive view about us, and I believe this will also be good for improving investor sentiment,” said the executive by telephone, stressing that the firm will sell more bonds to local investors.

Under the initiatives by KT CEO Hwang Chang-gyu to streamline business units, KT is expected to terminate contracts with more than 7,000 employees who receive higher paychecks.

Meanwhile, the company plans to pay out dividends to investors on April 18.

“KT may spend up to 900 billion won for compensation to its workers who applied for the voluntary retirement program. Also, some 200 billion won is needed for dividends. Spending for the one-time event will reach 1 trillion won. KT did a nice job of selling bonds to overseas investors,” said Hwang Sung-jin, an analyst at HMC Investment.