SK On, a latecomer to the battery industry, has raised over 10 trillion won in funds in one year and is issuing corporate bonds worth 200 billion won again. There are concerns that SK On, which continues to have large deficits, may be increasing its debt several times, putting a burden on its parent company, SK Innovation.
According to the financial investment industry on the 24th, SK On plans to issue public corporate bonds worth 200 billion won. It is a green bond for ESG (environmental, social, and governance) purposes and consists of a 2-year bond (KRW 80 billion) and a 3-year bond (KRW 120 billion). Depending on the results of the demand forecast conducted on the 24th of this month, the amount can be increased up to 400 billion won.
All funds raised this time are planned to be used to support Blue Oval SK. Blue Oval SK is a joint venture established in North America last July by SK On and Ford, and is currently building electric vehicle battery factories in Kentucky and Tennessee. This is SK On’s first entry into the domestic public offering corporate bond market. In a situation where a huge amount of money is needed for facility investment, it appears that it has appeared in the corporate bond market as it has mobilized most procurement methods such as large-scale paid-in capital increase and external investment.
The funds raised by SK On in the past year amount to a maximum of KRW 10.77 trillion, including KRW 2.6 trillion secured through the European Export Credit Agency (ECA) in July of last year. SK Innovation, the parent company of SK On, attracted approximately 530 billion won in investment from new Singaporean financial investors (FIs) last June.
Previously, in December last year, it secured 2 trillion won through paid-in capital increase from its parent company, SK Innovation, and attracted 1.2 trillion won from Hantu PE East Bridge Consortium. Last May, it secured 1.24 trillion won in investment from MBK Consortium and SNB Capital. In addition, it issued Eurobonds worth 1.2 trillion won in the global bond market and borrowed 2 trillion won from Hyundai Motor Group.
SK On’s financial stability is at its worst. As of the end of the first half of this year, the debt ratio was 183.4% and net debt dependence was 33.6%. The debt ratios of competitors Samsung SDI and LG Energy Solutions are 78.3% and 83.3%, respectively, which is high compared to the net debt dependence스포츠토토 of 18.3% and 22.0%, respectively.
The car wages (including private loans and lease liabilities) that SK On must repay within one year amounts to approximately 5.32 trillion won. This corresponds to 40.69% of total borrowings.
It would be best if SK On could repay with the money it earned through operations, but it is difficult to expect at the moment. As of the end of the first half of this year, SK On recorded an operating deficit of 447.1 billion won and a net loss of 490.1 billion won. Cash flow is also bleak. During the same period, operating cash flow was negative 1.3 trillion won, and free cash flow was negative 6.1 trillion won. Large cash flow deficits persist. During the first half of the year, 229.3 billion won was spent on interest expenses alone.
As SK On’s performance bottoms out and the amount of financing increases, the value of its parent company, SK Innovation, is falling. Last year, when SK On’s funding was blocked, SK Innovation took the lead and invested 2 trillion won in paid-in capital increase. As a result, SK Innovation recently conducted another paid-in capital increase worth 1.1 trillion won. Of these, 410 billion won will be used as facility funds and 310 billion won will be used to repay debt. Typically, a large-scale paid-in capital increase dilutes the value of the stock and thus acts as a factor in the decline in stock prices.
An official in the IB industry explained, “Considering the scale of capital expenditures (CAPEX) required to expand global production capacity, such as in the U.S. and Europe, an increase in borrowing is expected to be inevitable in the future.”