Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

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

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

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

Trading Strategies for Ecopro Co & Ecopro HN Post Split

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

Korean Stubs Spotlight: A Pair Trade Between Ecopro Co and Ecopro BM

Event-Driven

<p>Ecopro Co Ltd (086520 KS) announced after the market close on September 6th that it will conduct a rights offering worth 676 billion won, representing 37% of market cap. The company will issue 6.37 million new shares (representing 34% of its existing outstanding shares) and the rights offering price is 106,172 won per share, representing 9.1% premium to the current price.</p><p>The following are the key dates of the rights offering:</p><ul>
<li>Subscription expected dates - 13 October to 1 November</li>
<li>Rights offering subscription payments required - 4 November</li>
<li>Rights offering new shares listing - 19 November</li>
</ul><p>Ecopro Co will use the proceeds from the rights offering to purchase 6.12 million shares of Ecopro HN at 110,500 won (2% premium to current price) which total 676 billion won. Ecopro HN has 15.3 million shares outstanding so 6.12 million shares to be purchased in the tender offer would be 40% of outstanding shares. </p><div class="content-highlight"><p>Despite the opportunity to purchase an increasing stake in Ecopro HN, this will result in a significant shares dilution for the existing shareholders of Ecopro Co which is a big negative. Many investors will be concerned about Ecopro Co purchasing a large stake of Ecopro HN, especially after a steep increase in the latter company's stock price in the past three months. As a result, we have a Negative view of Ecopro Co at current levels. </p></div>

Ecopro Co Ltd (086520 KS) announced after the market close on September 6th that it will conduct a rights offering worth 676 billion won, representing 37% of market cap. The company will issue 6.37 million new shares (representing 34% of its existing outstanding shares) and the rights offering price is 106,172 won per share, representing 9.1% premium to the current price.The following are the key dates of the rights offering:
Subscription expected dates - 13 October to 1 November
Rights offering subscription payments required - 4 November
Rights offering new shares listing - 19 November
Ecopro Co will use the proceeds from the rights offering to purchase 6.12 million shares of Ecopro HN at 110,500 won (2% premium to current price) which total 676 billion won. Ecopro HN has 15.3 million shares outstanding so 6.12 million shares to be purchased in the tender offer would be 40% of outstanding shares. Despite the opportunity to purchase an increasing stake in Ecopro HN, this will result in a significant shares dilution for the existing shareholders of Ecopro Co which is a big negative. Many investors will be concerned about Ecopro Co purchasing a large stake of Ecopro HN, especially after a steep increase in the latter company's stock price in the past three months. As a result, we have a Negative view of Ecopro Co at current levels. 

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