Korea Thrunet May Raise $300 Mln Bond in Asian First
(Update1)
3/9/00 8:23:00 PM
Source: Bloomberg News
(Updates share price.)
Seoul, March 10 (Bloomberg) -- Korea Thrunet Co., the first Korean Nasdaq-listed company, may sell up to $300 million of high- yield debt in the first bond sale by an Asian Internet firm.
Korea's biggest high-speed Internet service provider is talking to investment banks about arranging the debt sale, Charles Rim, Thrunet's chief financial officer. Rim said the precise amount to be raised will be decided only after the company hires a bank to handle the sale.
'We, or anyone like us coming to the market would have scarcity value and we are being told by the banks that it would be very attractive,' Rim said.
The plan is a test case for Korean Internet-related companies as they seek funding to keep up with one of the fastest developing markets in the world. It will also test investor appetite for debt from Internet stocks out of Asia, where stock investors have been bidding up technology shares.
The company also wants to sell more equity following its successful U.S. listing in November and may also seek to have its shares traded on either the Kosdaq or Korea Stock Exchange, Rim said. Microsoft Corp. the world's largest software maker, holds a 10.5 percent stake in the Internet firm.
Thrunet, the leader in Korea's high-speed, or broadband, Internet market, earlier targeted up to a million sign ups this year in a market which it forecasts will reach between 2 to 3 million subscribers.
The company said it currently has 180,000 subscribers on its books not including those waiting to be connected.
Thrunet's Challenges
While it has succeeded in capturing over 50 percent of the market, rapid expansion of a service that only began to catch on last year has taken its toll on finances.
The company increased it net losses by 121 percent from the previous quarter to 19.7 billion won ($17.6 million) in the third quarter of last year.
Still, revenue from its Internet service increased by 80 percent in the same period from the preceding three months to 6.9 billion won. And Rim said the company's debt levels are low.
'Our debt to equity ratio is less than 65 percent and we have a lot of capacity to take on extra debt,' said Rim.
Thrunet went public in November on Nasdaq, raising $182 million in its initial share sale. The company sold 10.1 million shares at $18. Thrunet shares last traded at $65.50, up $1.00 valuing the company at $4.3 billion.
'We want to show our investors that as we continue our expansion we will have access to not only the equity market but also debt funding,' said Rim. High yield bonds typically offer investors a return of more than 10 percent.
Market Access
Broadband access to the Internet is growing in Korea as ISPs increase the range and complexity of their online content. Such services must be delivered over high speed data networks instead of the conventional personal computer modems and telephone lines used by most people who log onto the Web. Downloading a music file -- an increasingly popular use for the Internet --can take as long as 20 minutes using conventional telephone lines. Such downloads can be completed in less than 30 seconds with a cable modem and a dedicated line that carries more data.
While Thrunet is the first company to start a broadband service in Korea, it is far from the largest. Korea Telecom Corp., Korea's state-run fixed telephone line company, has a virtual monopoly on local phone calls and is ramping up its roll out of asynchronous digital subscriber line-based high speed Internet services.
Thrunet uses telecommunications cable already in use for cable TV to connect people to the Internet. ADSL allows use of existing copper twisted telephone wires. As yet, it is not clear which system will emerge as the winner.
Separately, Hanaro Telecom Inc., which provides both ISDN and cable-based high-speed Internet access, said it is following Thrunet's lead and applied to list on the Nasdaq as early as this month |
