What is 'payment in kind', where convertible bonds are paid for with assets instead of cash?

Payment in kind means a company receives the proceeds of convertible bonds or bonds with warrants in the form of physical assets, such as unlisted shares, real estate or intangible assets, instead of cash.

After the amount of such issuances (planned) by KOSPI and KOSDAQ companies grew sharply from KRW 259.4 billion in 2019 to KRW 1.1765 trillion in 2022, the Financial Supervisory Service revised the major matters report form with effect from April 7, 2023 to require the payment method (cash/other) to be stated, and, in the case of payment in kind, details of the contributed assets and their valuation method and, where they are shares of an unlisted company or similar, an overview and financial information of that company. Investors should use these disclosures to check whether the value of the contributed assets is appropriate.