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Amid downturn, Samsung Heavy issues first bonds in seven years

Seoul:  South Korea's Samsung Heavy Industries said on Monday it would sell $482 million in three-year domestic bonds, its first corporate bond offering since 2002, as ship orders slump and cash flow weakens.
"Samsung is preparing for a potential future crisis, securing cash," said Joey Lee, an analyst at Goodmorning Shinhan Securities. "Their balance still looks solid but it would be good if they can raise cash at using their strong credit ratings."
Samsung, the world's No. 3 shipbuilder by outstanding order book volume, said it would issue the 700 billion won ($482 million) bond on March 24 at a rate of 6.22 percent per annum.
The bond sale was to finance investment projects and repay maturing short-term debt, Samsung said in a filing to the financial regulator.
Samsung has so far financed investments with incoming cash from new orders and reserves, but "managing cash has become more important due to a rapid fall in new orders since the second half of 2008," the company said.
"A fall in new shipbuilding orders has accelerated since the fourth quarter of 2008," Samsung said as it states risks associated with the bond. "This downturn will likely to continue for a while." [17/03/09]


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