Korea Zinc will raise about 400 billion won by teaming up with Meritz Securities to push a large-scale solar and battery energy storage system (BESS) project. An Australian project company will issue convertible preferred shares, and Korea Zinc's headquarters will enter into a price return swap (PRS) using that equity as the underlying asset.
On the 21st, according to the Financial Supervisory Service's electronic disclosure system, Korea Zinc's Australian subsidiary Richmond Valley Energy Reserve Holdings Pty Ltd will conduct a third-party paid-in capital increase worth 400.55554 billion won. The shares will be allocated to a special-purpose company (SPC) established by Meritz Securities, "New South Wales Solar No.1 Co., Ltd."
The issuance consists of 193,392,978 nonvoting convertible preferred shares, which can be converted into common shares at a 1-to-1 ratio. The issue price is 2 Australian dollars (AUD) per share, which is about 2,071 won based on the previous day's Seoul Foreign Exchange Brokerage base rate (1 AUD = 1,035.60 won). The payment date is scheduled for Sept. 30. The facility funds will be deployed for power plant construction from Oct. to Dec. 2028.
Along with this paid-in capital increase, Korea Zinc also plans to sign a three-year PRS agreement with Meritz. In the disclosure, Korea Zinc said it "plans to enter into a swap (PRS) contract using the new shares to be issued to one subscriber as the underlying asset."
A PRS is a derivative contract in which gains and losses are settled between the parties based on changes in the underlying asset price. The structure is designed so that the Meritz SPC participates in the Australian unit's paid-in capital increase to acquire equity, while Korea Zinc bears the risk of changes in the value of that equity.
The funds raised will be invested in a project in the Richmond Valley area of New South Wales (NSW), Australia. Korea Zinc plans to build a 200 MW solar power plant and a long-duration BESS with a capacity of 275 MW and 2,200 MWh. According to the disclosure, the project will break ground in Oct. this year and begin commercial operation in Jan. 2029. It has already secured an environmental impact assessment and grid connection approval.
The project holding company, Richmond Valley Energy Reserve Holdings, is a wholly owned subsidiary of Ark Energy under Sun Metals Holdings, which is 100% owned by Korea Zinc. Ark Energy will pursue the project under a build-own-operate (BOO) model, directly handling development, construction, and operation.