GS E&C to issue $260 mn worth corporate bonds next month

South Korea’s GS Engineering & Construction Corp. (GS E&C) is readying public offering of maximum 300 billion won ($260 million) in bonds next month for the first time in six years to obtain working capital, industry sources said Monday.

The company is seeking to issue three- to five-year bonds. Its sole underwriter NH Investment & Securities will price the bonds through a book building session, according to sources.

The last time GS E&C offered straight bonds was in February 2013. It raised 320 billion won by issuing three-year bonds and 60 billion won with five-year bonds. Since it incurred heavy losses in the overseas plant business, the company has raised capital through mezzanine financing. It sold 57 billion won worth exchangeable bonds in 2015 and 250 billion won worth convertible bonds in 2016.

GS E&C is returning to the debt market upon improvement in credit rating. Seoul-based credit rating and consulting services provider Korea Ratings last month revised up GS E&C’s credit rating to A0 Stable from A- in February last year after reflecting its improved balance sheet and enhanced revenue generation from the buoyant housing market. It also cited that the company generated over 1 trillion won in operating cash flow last year.

Last week, GS E&C announced that it has won a $24 million deal to build a total of 24-megawatt solar power facilities in Zakarpattia, Ukraine on an engineering, procurement and construction (EPC) contract basis. The company holds a 30 percent stake in the $24 million project that aims to make two units of solar power plants with a capacity of 12.6 megawatt and 11.5 megawatt, respectively, and embarks on the commercial operation in April 2020.

On Tuesday, GS E&C shares closed 0.73 percent lower at 40,900 won in Seoul trading.

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