389 Billion KRW Raised Through Third-Party Allotment
Acquisition of Stake in Indonesia's Green Eco Nickel
EcoPro Materials, which raised 400 billion KRW through a paid-in capital increase, is set to fully enter the nickel refining industry in Indonesia.
On the 31st, EcoPro Materials announced plans to finalize the acquisition of a 28% stake in Green Eco Nickel, an Indonesian nickel refinery, and complete the merger notification in April, based on the 389 billion KRW secured through a third-party allotment paid-in capital increase.
Green Eco Nickel, established in June 2023, is a subsidiary of China's GEM, a long-term partner of EcoPro. Last year, the holding company EcoPro secured a 9% stake in Green Eco Nickel. The nickel metal refining capacity at Green Eco Nickel is approximately 20,000 tons per year.
With this stake acquisition, EcoPro Materials will become the largest shareholder of Green Eco Nickel. Including the shares held by the holding company, the group will ultimately hold a 38% stake. Song Hojun, CEO of EcoPro, stated at the holding company's shareholders' meeting on the 26th, "Once EcoPro Materials' Indonesian refining subsidiary begins full-scale operations, positive effects on EcoPro Materials' performance are expected due to its consolidation as a subsidiary."
EcoPro Materials has emphasized the competitiveness of its Indonesian nickel refining business to investors since last year to raise funds for the stake acquisition. The funding was secured through the issuance of Redeemable Convertible Preferred Shares (RCPS). RCPS refers to preferred shares that grant the right to convert into common shares after a certain period and the right to redeem the invested funds. The number of preferred shares issued this time is 5,121,067 shares, with the issue price set at 75,974 KRW, which is an 11.876% premium over the reference stock price of 67,908 KRW.
Depending on the investment type, investors can either receive repayment with interest after 3 or 5 years or convert the shares into common stock starting from April 9 next year. Since the converted common shares can be traded, the risk of stock price volatility over the next year is considered low.
The fact that investors chose to invest at a price approximately 12% higher than the reference stock price, with the option to convert to common shares after one year, is analyzed as a positive evaluation of EcoPro Materials' future growth potential. Major investors include IMM Investment, IMM Credit Solution, JKL Partners, and Mast Partners.
Through the issuance of RCPS, EcoPro Materials has also improved its financial soundness. Since the right of investors to demand fund redemption (put option) was excluded during the RCPS issuance process, the funds raised this time are fully recognized as equity in accounting terms.
An EcoPro Materials official said, "We have secured a large-scale investment fund in a timely manner to enter the Indonesian refining business," adding, "It is also positive that we were able to reaffirm market expectations for EcoPro Materials' future growth potential."
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