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

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

Ecopro Co Announces A Rights Offering Worth 676 Billion Won (37% of Market Cap)

StubWorld: What Is Up (Or Down) With Ecopro Co?

Pair Trade Setups of Korean Holdcos & Opcos

Clepsydra Capital

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

Event-Driven

<p><strong>Ecopro's tender offer to HN shareholders is slightly different from the previous cases in terms of the undertaking.</strong></p><hr><p>First, the tender offer procedure has not changed. The target is 6,121,913 shares, equivalent to 40% of Ecopro HN's issued shares. And the swap price of Ecopro HN is ₩110,500. The important point here is that this ₩110,500 has been confirmed and therefore won't change.</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":"Overview"}'>Overview</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":"Acquirer"}'>Acquirer</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ecopro Co., Ltd."}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Ecopro Co., Ltd.</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ticker"}'>- Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"086520"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula='="086520"'>086520</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Qty."}'><strong>- Qty.</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6371529}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>6,371,529</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Swap price"}'><strong>- Swap price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":106172}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>106,172</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target company"}'>Target company</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ecopro HN Co Ltd"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Ecopro HN Co Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Ticker"}'>- Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"383310"}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula='="383310"'>383310</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Qty."}'><strong>- Qty.</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6121973}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>6,121,973</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Swap price"}'><strong>- Swap price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":110500}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}'><strong>₩110,500</strong></td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target volume as % of SO"}'><strong>Target volume as % of SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.400000013067683}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula='=R[-2]C[0]/googlefinance(R[-3]C[0], "shares")'><strong>40.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target value"}'><strong>Target value</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":676478016500}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-2]C[0]*R[-3]C[0]"><strong>₩676,478,016,500</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Banker"}'>Banker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Daishin"}'>Daishin</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>For reference, the swap price of Ecopro HN, ₩110,500, was calculated as follows.</p><ul>
<li>September 3 is the reference date.</li>
<li>It was calculated through Min [Close on September 3, Average(Close on September 3, 1W VWAP, 1M VWAP)].</li>
<li>This is in accordance with the regulations of KRX.</li>
</ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/238/original/Screen+Shot+2021-09-06+at+10.01.23+PM.png?1630980223" class="editor-image img-responsive" data-smartkarma-image-id="228238"></figure></section><p><strong>The next important thing is that Ecopro's swap price is not fixed. </strong>₩106,172 is literally a tentative price. It was calculated by the formula below.</p><ul>
<li>September 1 is the reference date.</li>
<li>It was calculated through 3D VWAP at a discount rate of 0%.</li>
<li>This also follows the rules of KRX.</li>
</ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/239/original/Screen+Shot+2021-09-06+at+10.08.38+PM.png?1630980616" class="editor-image img-responsive" data-smartkarma-image-id="228239"></figure></section><p>This ₩106,172 is not a fixed amount, so it has practically no meaning. So when will Ecopro's swap price be finalized? <strong>Ecopro's swap price is confirmed through VWAP for 3 days from October 5th to 7th. The discount rate applied in this case is 0%.</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/242/original/Screen+Shot+2021-09-06+at+9.35.16+PM.png?1630980823" class="editor-image img-responsive" data-smartkarma-image-id="228242"></figure></section><hr><div class="content-highlight"><p><strong>Therefore, it is meaningless to calculate the swap arb spread at this point with the tentative price.</strong></p></div>

Ecopro's tender offer to HN shareholders is slightly different from the previous cases in terms of the undertaking.First, the tender offer procedure has not changed. The target is 6,121,913 shares, equivalent to 40% of Ecopro HN's issued shares. And the swap price of Ecopro HN is ₩110,500. The important point here is that this ₩110,500 has been confirmed and therefore won't change.





Overview

Type
Exchange offer


Acquirer
Ecopro Co., Ltd.


- Ticker
086520


- Qty.
6,371,529


- Swap price
106,172


Target company
Ecopro HN Co Ltd


- Ticker
383310


- Qty.
6,121,973


- Swap price
₩110,500



Target volume as % of SO
40.00%


Target value
₩676,478,016,500


Banker
Daishin

Source: DART

For reference, the swap price of Ecopro HN, ₩110,500, was calculated as follows.
September 3 is the reference date.
It was calculated through Min [Close on September 3, Average(Close on September 3, 1W VWAP, 1M VWAP)].
This is in accordance with the regulations of KRX.
The next important thing is that Ecopro's swap price is not fixed. ₩106,172 is literally a tentative price. It was calculated by the formula below.
September 1 is the reference date.
It was calculated through 3D VWAP at a discount rate of 0%.
This also follows the rules of KRX.
This ₩106,172 is not a fixed amount, so it has practically no meaning. So when will Ecopro's swap price be finalized? Ecopro's swap price is confirmed through VWAP for 3 days from October 5th to 7th. The discount rate applied in this case is 0%.Therefore, it is meaningless to calculate the swap arb spread at this point with the tentative price.

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

Ecopro Co Ltd

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