Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Ecopro Tender: Swap Ratio Finalized, Still Juicy Spread, & We Can Buy/Tender Now

Ecopro Tender: Undertaking Is a Bit Different but Should Offer a Fairly Juicy Arb Setup

Ecopro Tender Event: Pro-Ration Risk Analysis & Arb Spread Widening Possibilities

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<h2>Pro-ration results</h2>
<p>As suggested in the previous insight <a href="https://www.smartkarma.com/insights/ecopro-tender-event-pro-ration-risk-analysis-arb-spread-widening-possibilities" target="_blank" data-smartkarma-citation="insights:59265" rel="noopener">Ecopro Tender Event: Pro-Ration Risk Analysis &amp; Arb Spread Widening Possibilities</a>, Ecopro's final subscription rate fell short of hitting the target. The final rate was 74.41%, issuing only 5.27M new Ecopro shares. The forfeited shares are 1.81M, and these will not be issued.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/239/790/original/Screen+Shot+2021-11-02+at+10.31.05+PM.png?1636073811" class="editor-image img-responsive" data-smartkarma-image-id="239790"></figure>
</section>
<div class="content-caption">(<a href="https://engkind.krx.co.kr/common/disclsviewer.do?method=search&amp;acptNo=20211102000129&amp;docno=&amp;formProcsCd=070&amp;language=english" target="_blank" rel="noopener">Source: KRX KIND</a>)</div>
<p>As a result, Ecopro's number of issued shares will increase by 5.27M from <span data-sheets-value='{"1":3,"3":18701387}' data-sheets-userformat='{"2":15041,"3":{"1":2,"2":"#,##0","3":1},"9":2,"10":1,"12":0,"14":{"1":2,"2":0},"15":"Courier New","16":9}' data-sheets-formula='=googlefinance(R[-1]C[0], "shares")'>18.7M to 24.0M, representing a capital increase rate of 28.2% at a shareholding dilution of 22.0% </span></p>
<table class="table table-striped">
<colgroup>
<col width="300">
<col width="300">
</colgroup>
<tbody>
<tr>
<td colspan="2" data-sheets-value='{"1":2,"2":"Swap results"}'>Swap results</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Type"}'>Type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Exchange offer"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>Exchange offer</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target"}'>Target</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7087918}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>7,087,918</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": Capital increase rate"}'>: Capital increase rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.37900493690655135}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[-1]C[0]/googlefinance(R[-2]C[1], "shares")'>37.90%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": Dilution"}'>: Dilution</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.27483943440895364}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]/(R[-2]C[0]+R[-2]C[1])">27.48%</td>
</tr>
<tr>
<td colspan="2"></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Actual tendered"}'><strong>Actual tendered</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5274285}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>5,274,285</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": Capital increase rate"}'><strong>: Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.282026407987814}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-4]C[1]"><strong>28.20%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": Dilution"}'><strong>: Dilution</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.21998486632616596}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-2]C[0]/(R[-2]C[0]+R[-5]C[1])"><strong>22.00%</strong></td>
</tr>
<tr>
<td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td>
</tr>
</tbody>
</table>
<p>Since October 8, when the swap price ratio was finally confirmed, the swap arb spread has risen to a little above 3%. During the 20-day arb trading period, the spread had fluctuated pretty much at a 2-3% range. During this period, the relatively tight arb spread appears to be due to active arb trading, believing that pro-ration risk shouldn't be high.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/239/791/original/image_84768239521636074386606.png?1636074388" class="editor-image img-responsive" data-smartkarma-image-id="239791"></figure>

Pro-ration results
As suggested in the previous insight Ecopro Tender Event: Pro-Ration Risk Analysis &amp; Arb Spread Widening Possibilities, Ecopro's final subscription rate fell short of hitting the target. The final rate was 74.41%, issuing only 5.27M new Ecopro shares. The forfeited shares are 1.81M, and these will not be issued.



(Source: KRX KIND)
As a result, Ecopro's number of issued shares will increase by 5.27M from 18.7M to 24.0M, representing a capital increase rate of 28.2% at a shareholding dilution of 22.0% 







Swap results


Type
Exchange offer


Target
7,087,918


: Capital increase rate
37.90%


: Dilution
27.48%





Actual tendered
5,274,285


: Capital increase rate
28.20%


: Dilution
22.00%


Source: DART



Since October 8, when the swap price ratio was finally confirmed, the swap arb spread has risen to a little above 3%. During the 20-day arb trading period, the spread had fluctuated pretty much at a 2-3% range. During this period, the relatively tight arb spread appears to be due to active arb trading, believing that pro-ration risk shouldn't be high.


Ecopro Tender: Pro-Ration Results, KOSDAQ 150 Corporate Action & Est. Passive Impact

Ecopro Co Ltd

Ecopro Tender: Pro-Ration Results, KOSDAQ 150 Corporate Action & Est. Passive Impact