Kia U.S. unit to seek $300M from first Kimchi bonds

Kia Motors Corp.'s U.S. unit plans to raise $300 million from its first sale of kimchi bonds to provide working capital for a new factory, according to two people familiar with the matter.

Kia Motors Manufacturing Georgia Inc. will sell three-year bonds on Dec. 14, said the people, who asked not to be named as the transaction is private.

The notes will be priced to yield 430 basis points more than the six-month London interbank offered rate for dollars, the people said. A basis point is 0.01 percentage point.

Seoul-based Kia, South Korea's second-biggest carmaker, began production of its Sorento sport-utility vehicle at a $1 billion West Point, Georgia factory last month. The plant, Kia's first in the U.S., opened with initial annual capacity to make 130,000 units and aims to reach full capacity of 300,000 units a year by 2012, the company said.

Kimchi bonds are foreign-currency notes sold in South Korea by an overseas issuer. SK Shipping Co.'s European unit was the last borrower in the kimchi market when it issued $50 million of three-year bonds in September 2007, according to data compiled by Bloomberg.