[Market Now] Haitai Confectionery to launch IPO to repay debt

Haitai Confectionery & Foods, the seller of the hit snack Honey Butter Chip, said 80 percent of its initial public offering shares will be offered to retail and institutional investors.

In a regulatory filing on Thursday, Haitai said it would be offering a total of 5.83 million shares worth about 72 billion won ($63.3 million), or 12,300 won per share at a face value of 500 won. NH Investment & Securities and Samsung Securities is Haitai’s IPO manager.

Of the 80 percent, retail investors will be able subscribe to 20 percent of 4.66 million shares, while the rest of the IPO shares will be subscribed by institutional investors. Haitai will offer 20 percent of the 5.83 million shares to its employees.

The IPO subscriptions for retail and institutional investors, and Haitai employees will be held from April 27-28, the company said.

Haitai will use the IPO proceeds to repay its debt to the state-run Korea Development Bank and Kiwoom Securities. The snack company owes KDB 10 billion won with interest due in August this year, and 60 billion to Kiwoom due in September.

The confectionary giant filed for an IPO in January this year, and was given the greenlight by the Korea Exchange in March. It is expected to be listed on KOSPI next month.

The company warned of market risks it is facing, saying that Korea’s ageing population will likely to decrease demand for snacks, which are mostly consumed by the young, although the local market is dominated by few snack companies – Haitai, Lotte, Orion and Crown.

By Park Hyong-ki (hkp@heraldcorp.com)