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Meritz Securities office building. (Photo=Meritz Securities) |
[Alpha Biz= Reporter Kim Sangjin] Lotte Chemical is in the process of raising 1.4 trillion KRW in funds and has reportedly entered into a stock price return swap (PRS) contract with Meritz Securities worth approximately 660 billion KRW.
According to investment banking (IB) sources on the 28th, Meritz Securities recently signed a PRS contract with Lotte Chemical, targeting a 40% stake in its U.S. subsidiary LCLA, valued at around 477 million USD (approximately 662.6 billion KRW).
Meritz Financial Group, including Meritz Securities, will participate in a third-party allocation of a capital increase for LCLA, thereby securing the 40% stake.
A PRS is a derivative contract that exchanges stock price returns, functioning somewhat like collateral. Under this arrangement, while Meritz Financial holds a stake in LCLA, it provides returns based on stock price performance to Lotte Chemical, which in turn pays a certain fee.
If the stock value increases after five years, Meritz Financial will receive the profits from Lotte Chemical. Conversely, if the value decreases, Lotte Chemical will compensate Meritz Financial for the difference.
This contract is part of Lotte Chemical's plan to raise a total of 1.4 trillion KRW using its overseas subsidiary's shares. The company intends to secure the remaining approximately 700 billion KRW through another PRS contract focused on its Indonesian subsidiary, LCI.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
