New Issue: Korea Tobacco & Ginseng $244 mln convertibles at 2.0% yield, up 18%

By Ronda Fears

Nashville, Tenn., Oct. 25 - Korea Tobacco & Ginseng Corp. sold $244 million of five-year convertible senior notes at par to yield 4.0% with an 18% initial conversion premium, via joint bookrunners UBS Warburg, Credit Suisse First Boston and Hyundai Securities.

Korea Tobacco & Ginseng said it would use proceeds to finance the repurchase of stock from the Republic of Korea and the Industrial Bank of Korea. The issue is convertible into Korea Tobacco & Ginseng local shares or GDS.

Terms of the new deal are:

Issuer: Korea Tobacco & Ginseng Corp.

Amount: $244.13 million

Greenshoe: none

Lead Manager: UBS Warburg, Credit Suisse First Boston and Hyundai Securities

Maturity Date: Oct. 31, 2006

Coupon: 2.0%

Issue Price: par

Yield-to-Maturity: 4.57%

Spread: 125 basis points over the interpolated yield between the U.S. Treasury 6% due 2004 and

5.875% due 2004

Redemption Price: 114.26

Conversion Premium: 18%

Conversion Price: Won20.886 (1 GDS will represent 0.5 local share) or local stock using the fixed

exchange rate of US$1 = KRW 1,300.4

Conversion Ratio: 62.2618 in local shares, or 142.5236 GDS per note

Call: non-callable for three years

Settlement Date: Oct. 31

End

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