Korea’s messaging app operator Kakao Corp. said it will raise 250 billion won ($219 million) in convertible bonds in a bid to pay back bridge loans taken earlier this year to fund an acquisition.

In a public filing Monday, Kakao said the convertible bonds will come with a zero percent coupon rate maturing on April 14, 2021. The conversion price is set at 120,014 won per share and the conversion can be requested from April 14, 2017 to March 14, 2021, the company said.


Earlier this month, Kakao borrowed 800 billion won in short-term loans to fund its 1.9 trillion won acquisition of music streaming service provider Loen Entertainment Inc. With convertible bonds, the company can switch 250 billion won out of the 800 billion won debt from short-term to long-term one.

Kakao’s issuing of convertible bonds will clear the uncertainty over the company’s funding needs, which has been weighing on Kakao’s share price, said Ahn Jae-min, an analyst at NH Investment & Securities.

“With the funding uncertainty clearing, the company can now focus on new services such as its mobile chauffer service and mobile hair shop reservation service, which will begin in the second quarter in earnest,” Ahn said.

“The conversion price of 120,014 won is 22.7 percent higher than the company’s stock price on Monday that closed at 97,800 won. This is a highly favorable condition for Kakao,” he said.

Buyers are seven local securities companies -- Korea Investment & Securities, Samsung Securities, NH Investment & Securities, KDB Daewoo Securities, Hana Financial Investment, Shinhan Investment Corp. and KB Investment & Securities.

By Kim Yoon-mi (yoonmi@heraldcorp.com)