Korea Investment & Securities to Acquire 0.93% Stake in SK Corp. via PRS Agreement

Korea Investment & Securities will acquire a roughly 1 percent stake in SK Corp. for 400 billion won ($296.47 million) through a price return swap agreement.

Korea Investment Holdings disclosed Friday that its subsidiary, Korea Investment & Securities, has decided to acquire 681,431 shares of SK Corp. for 400 billion won. Following the acquisition, its stake in SK Corp. will stand at 0.93 percent.

The purchase price is equivalent to 3.57 percent of Korea Investment & Securities’ equity of 11.2 trillion won. The shares are scheduled to be acquired through a block trade on Nov. 2.

Under a PRS, a securities firm holds the shares while the counterparty settles the gain or loss arising from changes in the stock price at the end of the contract. The counterparty bears the downside if the stock price falls and receives the upside if it rises. In return for a predetermined fee, the securities firm is protected from losses on the principal.

The structure effectively allows the shares to be used as collateral for financing.

A Korea Investment & Securities official said the acquisition was “solely for investment purposes.”

SK Group Chairman Chey Tae-won has decided to sell SK Corp. shares worth 944 billion won to meet personal funding needs related to the property division lawsuit in his divorce proceedings.

SK Corp. disclosed Friday that Chey, its largest shareholder, will sell 1,653,924 shares of the company.

The remaining 972,493 shares will be sold to strategic investors at 559,387 won per share, for about 544 billion won.

“Chey will continue to focus on responsible management and enhancing SK Corp.’s corporate value,” an SK Corp. official said. “SK Corp. will also consistently pursue its existing growth strategy, investment plans and policies aimed at enhancing shareholder value.”