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

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Samsung Heavy's Unusual Preannouncement of Rights Offer: Pave the Path for Massive Arb Trades?

Samsung Heavy Industries ₩1.2T Rights Offer Walkthrough & Trading Approach

Untrustworthy Korean Regulators: Short Restrictions Applicable Only from Aug 18 in SHI Rights Offer

Clepsydra Capital

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

Event-Driven

<p>The subscription rights trade for Samsung Heavy Industries' rights offering started yesterday. It continues until next Wednesday, the 20th.</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":"Schedule"}'>Schedule</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Preliminary pricing"}'>Preliminary pricing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44453}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 09. 14</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ex-rights date"}'>Ex-rights date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44455}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 09. 16</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Record date"}'>Record date</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44456}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 09. 17</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade beginning"}'><strong>Subscription rights trade beginning</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44483}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 14</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights trade ending"}'><strong>Subscription rights trade ending</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44489}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 20</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Final pricing"}'><strong>Final pricing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 25</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stockholder subscription"}'>Stockholder subscription</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44497}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 10. 28</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44505}' data-sheets-numberformat='{"1":5,"2":"yyyy\". \"mm\". \"dd","3":1}'>2021. 11. 05</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44519}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 11. 19</strong></td>
</tr>
<tr>
<td colspan="2" style="text-align: left;"></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Short restriction begins"}'><strong>Short restriction begins</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44426}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 08. 18</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Short restriction ends"}'><strong>Short restriction ends</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44494}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 10. 25</strong></td>
</tr>
<tr>
<td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td>
</tr>
</tbody>
</table>
<p>The total number of subscription rights listed for trading is 200 million shares. It is 80% of the offering volume, which can be seen as an appropriate level considering the controlling stake of about 20%.</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"}'>Subscription rights trading</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Target"}'>Target</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A public offering of forfeited shares after offering to stockholders"}'>A public offering of forfeited shares after offering to stockholders</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Transferability"}'><strong>Transferability</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Renounceable"}'><strong>Renounceable</strong></td>
</tr>
<tr>
<td colspan="2" style="text-align: right;"></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Volume"}'>
<p><strong>Offering volume</strong></p>
</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":250000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>250,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights listed for trading"}'><strong>Subscription rights listed for trading</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":199790168}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'><strong>199,790,168</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":": % of the offering volume"}'><strong>: % of the offering volume</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.799160672}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-1]C[0]/R[-2]C[0]"><strong>79.92%</strong></td>
</tr>
<tr>
<td colspan="2" style="text-align: right;"></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Oversubscription privilege"}'>Oversubscription privilege</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.2}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>20.00%</td>
</tr>
<tr>
<td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td>
</tr>
</tbody>
</table>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/235/246/original/image?1634248727" class="editor-image img-responsive" data-smartkarma-image-id="235246"></figure>
<p>The subscription rights traded yesterday were about 15 million shares or 7.36% of the listed rights. Well, this 7.36% isn't small by the local standards, but given the massive offering size, well it can be seen as a bit of disappointment.</p>
<div class="content-highlight">
<p>Perhaps the main reason is that arb trading was not conducted aggressively because short selling was prohibited during the subscription rights trading period.</p>
</div>
<p>The subscription rights price was consistently above ₩930 yesterday, and the closing price was ₩965. The VWAP was ₩932.</p>
<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription rights (₩)"}'>Subscription rights (₩)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Close"}'>Close</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Volume"}'>Volume</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Value"}'>Value</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"VWAP"}'>VWAP</td>
</tr>
<tr>
<td data-sheets-value='{"1":3,"3":44483}' data-sheets-numberformat='{"1":5,"2":"mm\"/\"dd","3":1}' data-sheets-formula="=R[-1]C[0]-1">10/14</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":965}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩965</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":14700190}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>14,700,190</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13698716878}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}'>₩13,698,716,878</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":931.8734572818447}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula="=R[0]C[-1]/R[0]C[-2]">₩932</td>
</tr>
<tr>
<td colspan="5" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td>
</tr>
</tbody>
</table>

The subscription rights trade for Samsung Heavy Industries' rights offering started yesterday. It continues until next Wednesday, the 20th.







Schedule


Preliminary pricing
2021. 09. 14


Ex-rights date
2021. 09. 16


Record date
2021. 09. 17


Subscription rights trade beginning
2021. 10. 14


Subscription rights trade ending
2021. 10. 20


Final pricing
2021. 10. 25


Stockholder subscription
2021. 10. 28


Payment
2021. 11. 05


Listing
2021. 11. 19





Short restriction begins
2021. 08. 18


Short restriction ends
2021. 10. 25


Source: DART



The total number of subscription rights listed for trading is 200 million shares. It is 80% of the offering volume, which can be seen as an appropriate level considering the controlling stake of about 20%.







Subscription rights trading


Target
A public offering of forfeited shares after offering to stockholders


Transferability
Renounceable






Offering volume

250,000,000


Subscription rights listed for trading
199,790,168


: % of the offering volume
79.92%





Oversubscription privilege
20.00%


Source: DART &amp; KRX




The subscription rights traded yesterday were about 15 million shares or 7.36% of the listed rights. Well, this 7.36% isn't small by the local standards, but given the massive offering size, well it can be seen as a bit of disappointment.

Perhaps the main reason is that arb trading was not conducted aggressively because short selling was prohibited during the subscription rights trading period.

The subscription rights price was consistently above ₩930 yesterday, and the closing price was ₩965. The VWAP was ₩932.










Subscription rights (₩)
Close
Volume
Value
VWAP


10/14
₩965
14,700,190
₩13,698,716,878
₩932


Source: KRX




Samsung Heavy Industries Subscription Rights Trading: Arb Spread Checkup