Hon Hai plans to issue US$700m convertible bonds

Taipei, Oct. 18 (CNA) The Hon Hai Technology Group, also known as Foxconn, announced Friday that it will issue US$700 million in unsecured overseas convertible bonds in 2024 next week, the first overseas convertible bond offering by Foxconn this year.

The bonds, which will have a 0 percent interest rate and a five-year maturity, will be issued and traded on the Singapore Exchange starting on Oct. 24, the world's largest contract electronics manufacturer said in a filing with the Taiwan Stock Exchange Corp.

Hon Hai said bondholders will have the option to convert these bonds into newly issued common shares during the conversion period, at a conversion price of NT$300 (US$9.34) per share.

Based on Hon Hai's intraday stock price of NT$209, recorded on Friday morning, the conversion price represents a premium of 43.5 percent. Market analysts said this suggests investors believe Hon Hai's long-term stock price could potentially reach NT$300.

According to Hon Hai, the funds raised from these convertible bonds will mainly be used for the overseas procurement of raw materials, which is expected to reduce interest expenses.

It further said that if all the convertible bonds are fully converted within this fiscal year, the dilution ratio of the capital stock will be approximately 0.54 percent, indicating a limited dilution effect on existing shareholder equity.