SK Innovation mulling sell-off as affiliates struggle under debt

SK Innovation is considering selling off SK ie technology, a subsidiary that manufactures battery separators, amid financial distress.

The Korean company said Thursday that it is “reviewing various options related to the adjustment of battery business portfolios such as a partial sell-off of SK ie technology,” adding that no details have been decided, in a regulatory filing.

SK Innovation currently holds 61 percent of SK ie technology, whose market capitalization stands at around 4 trillion won ($3 billion) as of Thursday.

The sell-off is reportedly meant to raise funds for SK On, a battery-making subsidiary of SK Innovation, which desperately needs funds to build plants in North America.

SK On estimated around 7.5 trillion won capital expenditures this year. The company has reported loss for the three consecutive years since its establishment with 582 billion won of operating loss last year.

SK Innovation is reportedly proceeding with a merger of SK On and SK Enmove, a supplier of lube base oil, to bolster the initial public offering (IPO) price of its battery-making arm.

SK ie technology swung to an operating loss of 67.4 billion won in the first quarter compared to 1.7 billion won of operating profit during the same period last year, largely due to slowing EV sales.

The regulatory filing came after the Korea Investors Service, a major credit rating agency in Korea, pinpointed the debt risk of funds raised by SK affiliates.

“SK affiliates raised a total of 17 trillion won of funds between 2020 and 2023, including through IPOs, and of them, 8 trillion won are with possibilities of turning to debt,” said Chang Soo-myung, a researcher from Korea Investors Service.

Chang added that there would be “detailed monitoring of the credit ratings of subsidiaries that need massive additional funds.”

Shares of SK Innovation slid 0.6 percent to close at 109,700 won on Thursday while SK ie technology rose 0.5 percent to 57,600 won.

BY SARAH CHEA [chea.sarah@joongang.co.kr]