Photo courtesy of Yonhap News

 

[Alpha Biz= Paul Lee] Doosan Corporation has early-settled a price return swap (PRS) contract tied to shares of Doosan Robotics to secure funding for its planned acquisition of SK Siltron, according to investment banking sources on March 3.

A PRS is a derivative contract in which gains or losses from changes in the value of an underlying asset are settled at maturity. It allows a company to secure liquidity without immediately worsening its financial leverage. While similar to a stock-backed loan, PRS arrangements can be classified as capital, offering balance sheet advantages.

Doosan completed settlement of a PRS covering 11.7 million shares of Doosan Robotics on Feb. 25. Through the transaction, the company secured 947.7 billion won in base proceeds (based on 81,000 won per share), along with additional gains resulting from the rise in the share price.

Given that Doosan Robotics closed at 107,300 won on the settlement date, Doosan is estimated to have realized an additional gain of roughly 26,000 won per share. Even after factoring in potential block-deal discounts, the additional cash inflow is estimated to exceed 250 billion won, bringing total funds secured through the stake monetization to more than 1.2 trillion won.

The early settlement appears aimed at securing acquisition financing for SK Siltron. Market participants expect Doosan and SK Group to sign a share purchase agreement (SPA) for SK Siltron within this month.

The sharp rise in Doosan Robotics’ share price also likely influenced the decision, as early settlement reduces the risk of the stock falling below the reference price at maturity. The stock has surged about 32% from Dec. 23 last year—when the PRS contract was signed—through Feb. 27.

SK Siltron’s enterprise value is estimated at around 4.3 trillion won. Considering its net debt of approximately 2.4 trillion won, the required equity funding is estimated at about 1.9 trillion won. Combined with existing cash and funds raised through the monetization of Doosan Robotics shares, Doosan is expected to secure more than 2.4 trillion won in liquidity for the deal.

The early settlement also alleviates concerns among Doosan Robotics shareholders about potential overhang risks from large-scale share disposals. Following the transaction, Doosan’s stake in Doosan Robotics declined from 68.11% to 50.06%.

 

 

 

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