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Abstract generation in progress

On July 6, SK Hynix launched U.S. ADR bookbuilding. The company plans to issue 17.79 million new ordinary shares, which will be traded on Nasdaq through ADRs; 10 ADRs represent 1 ordinary share. Based on the Seoul closing price on July 3, the reference price is 242,500 won per ADR, equivalent to 2,425,000 won per ordinary share. Using this basis, 17.79 million ordinary shares correspond to 177.9 million ADRs, for total fundraising of approximately 43.14075 trillion won, or about $28 billion. Previously, the company’s disclosed target was 45.453 trillion won, or about $29.4 billion; due to a recent pullback in the share price, the latest target has been lowered.

Under the current timetable, bookbuilding begins on July 6. The final offering price is expected to be set on July 9, and the ADRs are expected to start trading on Nasdaq on July 10. Baillie Gifford, Coatue, and Leopold Aschenbrenner’s Situational Awareness Partners have together expressed subscription interest of up to approximately $7 billion.

Market attention is easily drawn to the question of whether there will be a “blow-off” on the first day. But that’s too small a question. The real question is: if a company is not short of cash, why issue new shares when the share price is surging and earnings are at their strongest? And why not raise funds only in Seoul, but instead go to Nasdaq to issue ADRs? What “traps” should be watched for here?

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