Forum for discussing Korea Telecom - IPO of ADR 5/26/99
Korea Telecom raises $2.49 billion in ADR sale
By Bill Clifford, CBS MarketWatch
Last Update: 9:14 AM ET May 26, 1999 NewsWatch
TOKYO (CBS.MW) -- Korea Telecom accomplished the biggest share sale ever by a South Korean company, raising $2.49 billion in offering 90.2 million American depositary receipts to overseas investors.
Bids for the government-controlled company's ADRs had been so strong that the offering was increased from an original target of $1.7 billion.
That's a powerful sign of growing investor confidence in South Korea's privatization program and the country's recovery from its worst economic slump in half a century.
The sale amounted to 14.4 percent of Korea Telecom's outstanding shares, 6.6 percent of existing government-held shares and 7.8 percent of new shares, the Ministry of Planning and Budget said Wednesday.
The ministry said the shares were sold as two ADRs for each common share traded in Seoul. The ADR price of $27.56 reflects a premium of 20 percent over the stock's domestic closing price of 54,500 won ($45.83) on Tuesday. Korea Telecom listed on the Seoul Stock Exchange at 28,750 won in December.
The ADRs will start trading in New York and London on Wednesday under the symbol KTC.
Korea Telecom executives have said the proceeds from the issue would help to reduce debts totaling 2.98 trillion won ($2.3 billion), implement payroll cuts and invest in mobile-phone and Internet-relate businesses.
Industry analysts say this is crucial if Korea Telecom is to return more profit to shareholders. Even before the Asian financial crisis of 1997-98 hit, Korea Telecom's ROE had fallen below 10 percent.
With the ADR issue, lead managed by Morgan Stanley Dean Witter & Co., foreign investors saw their holdings in Korea's largest phone company rise to 19 percent from 5 percent. The government's stake in Korea Telecom has been reduced to 59 percent to 71.2 percent. Korean officials expect the stake will fall to 33.4 percent by 2001
|
