Doosan Fuel Cell Co., Ltd.’s ₩400 billion perpetual bond bill: “₩20 billion in annual interest in three years” [fn Market Watch]

[Financial News] Doosan Fuel Cell Co., Ltd. is moving to bolster its capital by issuing ₩400 billion worth of perpetual convertible bonds (CBs) and bonds with warrants (BWs). The company aims to secure both funds to purchase raw materials needed to expand its fuel-cell business for artificial intelligence (AI) data centers and funds to repay existing borrowings.
However, interest rates will rise sharply starting three years after issuance, and the company will also face the risk of dilution from conversion into shares. The structure eases immediate financial pressure but makes future improvements in cash generation crucial.
According to filings with the Financial Supervisory Service’s electronic disclosure system on the 13th, Doosan Fuel Cell Co., Ltd. decided that day to issue ₩300 billion worth of perpetual CBs and ₩100 billion worth of perpetual BWs.
The scheduled payment date is November 12. Korea Investment & Securities Co., Ltd., KB Securities and Daishin Securities are among the underwriters.
The proceeds will be allocated for separate purposes. The ₩300 billion raised through the CBs will go toward purchasing raw materials related to the fuel-cell business, including for AI data centers.
The ₩100 billion in proceeds from the BW issuance will be used to repay existing debt. In effect, 25% of the total proceeds will go toward paying down existing debt rather than new investment.
The interest-rate structure is worth noting. For both securities, the coupon rate will be 0% and the guaranteed yield to maturity will be 2% per year for the first three years. From November 2029, however, 5 percentage points will be added to each rate. The rates will then rise by an additional 1 percentage point each year. If the bonds are still outstanding after three years, the annual interest burden could reach ₩20 billion based on the coupon rate.
The bonds have a 30-year term and mature in 2056, but the company can extend them. Investors have no early redemption right (put option), while the company can exercise a call option from a certain point onward. The structure takes into account the need to secure equity classification for accounting purposes, but given the financial-cost burden after the step-up, 2029 is expected to become a key point for cash management in practice.
The possibility of shareholder dilution also remains. The conversion price of the CBs and the exercise price of the BWs are both ₩43,704. If all the CBs are converted and all the warrants exercised, about 9.15 million new shares could be issued. That would amount to about 11% of the existing shares outstanding. Whether the securities are actually converted into shares will depend on the future share price and the bond terms.
The company’s financial position is another factor to watch. Last year, Doosan Fuel Cell Co., Ltd. recorded consolidated revenue of ₩454.8 billion, an operating loss of ₩105.7 billion and a net loss of ₩132.8 billion. Even if this fundraising provides the capital needed to expand its fuel-cell business, the step-up burden could grow if it does not lead to actual revenue growth and a recovery in profitability.
Meanwhile, industry investment bankers see the key to the deal as the company’s future ability to repay, rather than the amount raised. One industry source said, “Since the company secured equity-like funding while lowering its initial interest burden, the need for additional borrowing or refinancing could vary depending on how much it improves operating cash flow over the next three years.”


[email protected] Kim Gyeong-a Reporter