Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

2021 High Conviction: LG Corp's Decade-Low Stub

LG Corp (003550 KS): Whitebox States Its Case

Quiddity Advisors

Event-Driven

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<p>Back on 26 November, <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> announced it would be splitting itself into two: the core electronics, chemicals, and telecoms business would stay in LG Corp, with the remaining non-core holdings transferred to NewCo (LX Holdings), a new holding company, and subsequently spun-off to LG Corp shareholders. The spin-off ratio was set at 0.9115879 (LG Corp): 0.0884121 (LX Holdings).</p>
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<div>It was noted at the time that LG Corp would maintain 91.5% of the group's assets - ₩9,779.8bn - as at 3Q20. This raised the question: just how much value can be unlocked via spinning off ~8%? </div>
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<p>The before &amp; after were detailed in a <a href="https://www.lgcorp.com/ir/dataroom/report/annual/files/40503" target="_blank" rel="noopener">company presentation</a>:</p>
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<p>US-headquartered Whitebox said a little under a month later that the "<em>The spin-off does nothing to address LG’s most pressing issue, which is the unprecedented discount at which the company trades relative to its assets and, accordingly, inferior return to shareholders</em>."</p>
<p>All to no avail. Shareholders approved the split on the 26 March, and the relisting for both LG Corp and LX Holdings takes place tomorrow, the 27 May.</p>
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<h3>Indicative Timetable</h3>
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<td style="width: 205.417px;" data-sheets-value='{"1":3,"3":44281}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>26-Mar-21</td>
<td style="width: 496.845px;">Shareholders Meeting</td>
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<td style="width: 205.417px;">29-Apr-21</td>
<td style="width: 496.845px;">Trade Suspension Commences</td>
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<td style="width: 205.417px;" data-sheets-value='{"1":3,"3":44316}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>30-Apr-21</td>
<td style="width: 496.845px;">Record Date</td>
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<td style="width: 205.417px;">1-May-21</td>
<td style="width: 496.845px;">Split Date</td>
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<td style="width: 205.417px;" data-sheets-value='{"1":3,"3":44343}' data-sheets-numberformat='{"1":5,"2":"m\"/\"d\"/\"yy"}'>27-May-21</td>
<td style="width: 496.845px;">Relisting of both LG Corp and LX Holdings</td>
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<td style="width: 205.417px;" data-sheets-value='{"1":2,"2":"Source: DART"}'><em>Source: LG</em></td>
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<p>The questions now are: where will LG Corp and LX trade tomorrow, and what are the immediate index implications.</p>
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<p>More below the fold.</p>
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Back on 26 November, LG Corp (003550 KS) announced it would be splitting itself into two: the core electronics, chemicals, and telecoms business would stay in LG Corp, with the remaining non-core holdings transferred to NewCo (LX Holdings), a new holding company, and subsequently spun-off to LG Corp shareholders. The spin-off ratio was set at 0.9115879 (LG Corp): 0.0884121 (LX Holdings).

It was noted at the time that LG Corp would maintain 91.5% of the group's assets - ₩9,779.8bn - as at 3Q20. This raised the question: just how much value can be unlocked via spinning off ~8%? 

The before &amp; after were detailed in a company presentation:





US-headquartered Whitebox said a little under a month later that the "The spin-off does nothing to address LG’s most pressing issue, which is the unprecedented discount at which the company trades relative to its assets and, accordingly, inferior return to shareholders."
All to no avail. Shareholders approved the split on the 26 March, and the relisting for both LG Corp and LX Holdings takes place tomorrow, the 27 May.


   



Indicative Timetable



26-Mar-21
Shareholders Meeting


29-Apr-21
Trade Suspension Commences


30-Apr-21
Record Date


1-May-21
Split Date


27-May-21
Relisting of both LG Corp and LX Holdings


Source: LG






The questions now are: where will LG Corp and LX trade tomorrow, and what are the immediate index implications.





More below the fold.



LG Corp (003550): Index Treatment As Shares Resume Tomorrow