Lotte Tour Development Co. has secured 800 billion won ($724 million) through mortgage and convertible bond issue in funding to open Jeju Dream Tower, its new 38-story leisure complex, next month as planned in the southern resort island of Jeju.

The company disclosed Thursday that it raised 700 billion won in mortgage loans through Shinhan Investment Corp and Korea Investment & Securities Co. In addition, it secured an additional 100 billion won by issuing convertible bonds to CCG Investment Asia Ltd., an investment arm of Singapore’s CGS-CIMB Securities.

The 800 billion won loan was made in two tranches – 6,000 billion won and 1,000 billion won. The 6,000 billion won senior mortgage loan was issued to 56 financial institutions including Korea Investment & Securities. The 1,000 billion won subordinate loan was raised through Kiwoom Yes Savings Bank and three other institutions. The senior loan carries an annual interest rate of 4.05 percent and the subordinate debt 5.9 percent. Both mature in 3 years.

The 100 billion won worth debt, issued to CCG Investment Asia, is a four-year unsecured private convertible bond. It has a coupon rate of 2.5 percent and a year-to-maturity (redemption yield) of 4.5 percent. The bond carries an option to be converted to 5,847,953 common shares, or 7.8 percent of total outstanding issues, with a fixed price of 17,100 won per piece.

Lotte Tour Development will use the proceeds on settling payments of its 1.6 trillion won worth Jeju Dream Tower project. It will spend 200 billion won on repaying loans, and 350 billion won on expense settlement with its co-developer China’s Greenland Group.

The Jeju Dream Tower is 38-story 169-meter high twin skyscrapers, with a hotel, restaurants, casino and other leisure facilities.

On Friday, shares of Lotte Tour Development ended down 0.59 percent at 16,900 won.

By Na Hyun-joon and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]