LG Chem Ltd. is preparing to raise approximately 1.4 trillion won ($1 billion) through exchangeable bonds backed by shares of its battery subsidiary, as the Korean chemical producer confronts approaching debt obligations.
The bonds, secured by a 1.76% stake in LG Energy Solution Ltd., will mature in three years with a 2% coupon rate, according to a regulatory filing Wednesday. The securities will be marketed to institutional investors across Europe and Asia before listing on Vienna’s exchange.
The transaction addresses potential early redemption demands on a 1.3 trillion won five-year bond issued in 2023, which becomes eligible for investor put options starting July 18. The subsidiary’s stock has plummeted since then, trading at 307,000 won compared to the original exchange price of 687,500 won.
Bondholders of the new issue can convert their holdings into LG Energy Solution shares between July 2025 and June 2028 at 337,700 won per share, representing a premium over current market prices.
The refinancing follows LG Chem’s abandoned attempt last year to divest a portion of its 81.84% stake in LG Energy Solution through a block sale. That effort was scrapped amid declining battery stock prices and heightened industry uncertainty.
HSBC, Bank of America, and Morgan Stanley are managing the transaction, scheduled to close June 16.
