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

GC Lab Cell Merger: Multi-Staged Arb Setups for Swap Spreads & KOSDAQ 150 Rebalancing on Oct 27

Green Cross Lab Cell: Short-Selling Entry Timing Ahead of New Shares Listing on Nov 17

Green Cross Stock Swap: A 5% Spread Is a Rare Opportunity

GC Cell - GC LabCell: Korean Biopharma Merger Trading Tight

Green Cross Merger Swap Summary & Arb Spread Status

Clepsydra Capital

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

Event-Driven

<p>The arb spread of the Green Cross swap event widened to 5% again today. Although it is less than the level that expanded to the 7% level a while ago, the current level is definitely attractive compared to the 4% level last week.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/447/original/image_15933136631631505330831.png?1631505332" class="editor-image img-responsive" data-smartkarma-image-id="229447"></figure><p>Today is the day of the general meeting of shareholders for the approval of the merger. And both companies have just obtained shareholder approval. The key was whether Green Cross Cell would receive shareholder approval, and as 5.68 million shares voted in favor of the merger, the merger passed the general shareholders' meeting.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Schedule"}' data-sheets-note="Sang Hyun Park: We have to buy shares until BOD+1 to be eligible to receive stock purchase rights. We then have to notify our dissenting opinion until the end of dissenting opinion notice period.">Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shareholder meeting"}'><strong>Shareholder meeting</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44087}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'><strong>2021. 09. 13</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock purchase right exercise"}'><strong>Stock purchase right exercise</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"2020. 09. 13 ~ 10. 04"}'><strong>2021. 09. 13 ~ 10. 04</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Trade suspension (only Green Cross Cell)"}'>Trade suspension (only Green Cross Cell)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"2020. 10. 28 ~ 11. 11"}'>2021. 10. 28 ~ 11. 11</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44147}' data-sheets-numberformat='{"1":5,"2":"yyyy. mm. dd","3":1}'>2021. 11. 12</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>Of course, just because the merger was approved at the shareholders' meeting doesn't mean everything is over. We will now have an appraisal rights exercise period from today to October 4th. If the stock purchase cost exceeds ₩150B, the merger may be canceled. Currently, the spread between Green Cross Cell's dissent rights exercise price and the current share price has widened to the 7% range, so we cannot be relieved.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Spread - stock purchase"}'>Spread - stock purchase</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Acquirer"}'>Green Cross Lab Cell</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Target company"}'>Green Cross Cell</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Current price"}'>Current price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":99400}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-29]C[0]">₩99,400</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":38000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-29]C[0]"><strong>₩38,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Exercise price"}'>Exercise price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":103244}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=Terms!R[-18]C[0]">₩103,244</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":41163}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=Terms!R[-17]C[-1]"><strong>₩41,163</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Transfer income tax"}'>Transfer income tax</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":790.68}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[16]C[0]/R[9]C[0]">₩791</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":640.86}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[16]C[0]/R[9]C[0]"><strong>₩641</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Shares"}'>- Shares</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10000}' data-sheets-numberformat='[null,2,"#,##0"]' data-sheets-formula="=R[8]C[0]">10,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10000}' data-sheets-numberformat='[null,2,"#,##0"]' data-sheets-formula="=R[8]C[0]"><strong>10,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Tax-adj. exercise price"}'>Tax-adj. exercise price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":102453.32}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-3]C[0]-R[-2]C[0]">₩102,453</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":40522.14}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R[-3]C[0]-R[-2]C[0]"><strong>₩40,522</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Spread"}'>Spread</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.030717505030181155}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-34]C[0])/R[-34]C[0]">3.07%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.06637210526315789}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R[-1]C[0]-R[-34]C[0])/R[-34]C[0]"><strong>6.64%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table>

The arb spread of the Green Cross swap event widened to 5% again today. Although it is less than the level that expanded to the 7% level a while ago, the current level is definitely attractive compared to the 4% level last week.Today is the day of the general meeting of shareholders for the approval of the merger. And both companies have just obtained shareholder approval. The key was whether Green Cross Cell would receive shareholder approval, and as 5.68 million shares voted in favor of the merger, the merger passed the general shareholders' meeting.





Schedule

Shareholder meeting
2021. 09. 13


Stock purchase right exercise
2021. 09. 13 ~ 10. 04


Trade suspension (only Green Cross Cell)
2021. 10. 28 ~ 11. 11


Listing
2021. 11. 12

Source: DART

Of course, just because the merger was approved at the shareholders' meeting doesn't mean everything is over. We will now have an appraisal rights exercise period from today to October 4th. If the stock purchase cost exceeds ₩150B, the merger may be canceled. Currently, the spread between Green Cross Cell's dissent rights exercise price and the current share price has widened to the 7% range, so we cannot be relieved.







Spread - stock purchase
Green Cross Lab Cell
Green Cross Cell


Current price
₩99,400
₩38,000


Exercise price
₩103,244
₩41,163


Transfer income tax
₩791
₩641


- Shares
10,000
10,000


Tax-adj. exercise price
₩102,453
₩40,522


Spread
3.07%
6.64%

Source: DART &amp; KRX



Green Cross Merger Got Shareholder Approval (Both Companies): Arb Spread at 5%, I'd Trade It