SK Hynix ADR Conversion Opens Arbitrage Test for US Premium

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โดย Bloomberg·Read original

Summary · why it matters

SK Hynix's American depositary receipts become convertible on Thursday US time, allowing holders to swap between US-listed ADRs and Korea-listed common shares for the first time since the company's $26.5 billion mega listing. The conversion mechanism, managed by depositary bank Citigroup, lets investors surrender ADRs to receive Korean ordinary shares or deposit Seoul-listed stock to issue new ADRs, a process expected to take three to five days. However, the number of shares convertible to ADRs is capped at 2.5% of total shares outstanding and that quota is already fully utilized, meaning no additional Korea-listed shares can be converted into ADRs unless existing ADR holders first cancel their receipts and switch back to Korean stock. SK Group Chairman Chey Tae-won said on July 10 that the company is open to issuing more ADRs if investor returns are strong and the share price remains stable. The one-way constraint has allowed the ADRs to trade at a persistent premium, averaging about 26% since the offering and reaching as high as 51%, and the conversion will test whether arbitrage can narrow that gap.