Battery maker SK On to raise $750 million through third-party capital increase

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Battery maker SK On to raise $750 million through third-party capital increase

Published: 03 Oct. 2024, 16:31 Updated: 03 Oct. 2024, 16:49

LEE JAE-LIM
lee.jaelim@joongang.co.kr

A battery plant of SK Battery America, a U.S. subsidiary of SK Innovation, in Georgia [SK INNOVATION]

Battery maker SK On will raise 1 trillion won ($750 million) through a third-party capital increase to improve its financial structure following 11 consecutive quarters of losses.

A total of 18,031,337 shares will be issued at 55,459 won per share.

SK Innovation announced through an electronic disclosure on Wednesday that the move is intended to achieve management objectives such as strengthening the battery maker’s financial structure.

The payment will be delivered by Oct. 15, and the new shares will be issued the following day.

Five companies participated in the funding, including Korea Investment & Securities.

The transaction will be conducted through the price return swap (PRS) method. A PRS refers to an agreement made between the involved parties in which one agrees to pay the other any increase or decrease in the price of a stock over a specified period.

Despite sluggish sales of battery-powered vehicles due to the EV chasm, investors are seen to have taken part in the funding with a long-term outlook, anticipating that SK On’s shares will increase as electric cars become more widely adopted.

On the same day, SK Innovation also announced through a disclosure that it will buy 4 million shares of SK Enmove, its lubricant supplying subsidiary, from Eco Solutions, a subsidiary of IMM Private Equity, for 142.7 billion won.

With the purchase, SK Innovation’s stake in SK Enmove increased to 70 percent from 60 percent prior.

Eco Solutions is a special purpose company formed by IMM Credit Solutions (ICS) to invest in SK Enmove.

In April 2021, ICS became the second largest shareholder of the lubricant supplier by acquiring a 40 percent stake in the company for 1.2 trillion won.

SK Innovation secured a call option in the deal to buy back a 10 percent stake of its subsidiary under certain conditions.

SK Enmove is in the process of making large-scale investments in the liquid immersion cooling market, which is gaining spotlight in the AI era.

On the following day, the company said that it signed a heads of agreement (HOA) for iodine supply with Chilie’s SQM, the world’s largest iodine producer, to develop advanced car air conditioner refrigerants.

Iodine is a key ingredient for next-generation vehicle refrigerants with high energy efficiency.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]