Kepco plans $250 million convertible, $250 million "going public" offering for Powercomm

New York, Sept. 30 - Korea Electric Power Corp. said it plans to issue approximately $250 million of convertible bonds in the overseas capital markets and also plans a $250 million offering of "going public" bonds exchangeable into stock of its Powercomm subsidiary.

The Seoul, Korea company said in a filing with the Securities and Exchange Commission that its board of directors has authorized sale of bonds convertible into approximately 10 million shares of its stock, or 1.56% of its total issued shares. Alternatively the bonds will be convertible into Kepco's American Depositary Shares.

The bonds will have a five-year maturity with a put option after three years.

Kepco will offer the convertibles outside Korea in an offering exempt from registration under U.S. securities laws.

Proceeds will be used to repay existing debt.

The issue will be brought to market within three months of the board's resolution on Sept. 29.

Underwriters, the interest rate and the conversion ratio remain to be determined, the company said.

Kepco also said its directors have modified its plan to spin off the company's Powercomm subsidiary.

Kepco now plans to establish a special-purpose vehicle that will issue "going public" bonds. These securities will be exchangeable into Powercomm shares once certain qualifying events have occurred, including listing of Powercomm on a stock exchange.

Kepco will issue approximately $250 million of its own bonds to the SPV and an option to purchase Powercomm shares. The SPV will then issue the going-public bonds, which will have the Kepco bonds and the options as their underlying assets.

Once the going-public bonds are issued, Kepco will list approximately 17% of its stake in Powercomm on one or more stock exchanges as market conditions permit. After the listing, a further 17% is expected to be exchanged through the bond issue. Kepco will dispose of a further 10% at a future date.

Previously Kepco had planned to sell 43% of its ownership of Powercomm this year through listing on stock exchanges, 20.2% on overseas exchanges, 10% on a Korean stock exchange and 12.8% through other sales.

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