SK On, a subsidiary of SK Innovation, disclosed that it would raise 1 trillion won (approximately $755 million) through a rights offering via a third-party allotment, issuing 18,031,337 common shares. It represents 3.7% of its total issued shares.
The capital increase is part of company’s effort to improve its financial structure. Following a prolonged period of losses due to slower-than-expected growth in the EV market, the company’s finances were stabilized. The new shares will be issued at 55,459 won per share, and the funds raised will support future business objectives.
Korea Investment & Securities, Jionpost, S-Project Inno, Brilliant S, and New Star Green Energy First are participants in SK On’s capital increase. These investors will benefit from a Price Return Swap (PRS) agreement, which guarantees them a certain return.
Under this arrangement, SK Innovation will cover the difference if SK On’s stock price falls below the issue price of 55,459 won. Conversely, investors will return the excess to SK Innovation if the stock price rises. This financial method, commonly used by domestic companies, enables firms to raise capital while protecting investors from potential stock price fluctuations.
Industry analysts believe that although the battery market is facing challenges, SK On’s long-term prospects are promising due to the expected growth in the electric vehicle (EV) sector. This optimism is reflected in using the PRS contract, as investors anticipate an eventual rise in company’s share value as the demand for EV batteries strengthens over time.
On the same day, SK Innovation announced it would acquire 4 million shares of SK Enmove from Eco Solution Holdings for 142.7 billion won. This transaction will increase SK Innovation’s ownership of SK Enmove from 60% to 70%. As SK Enmove has been focusing on immersion cooling technology, it is gaining importance in areas like AI and EV infrastructure.
Eco Solution Holdings, a subsidiary of IMM Private Equity, previously acquired a 40% stake in SK Enmove in 2021. SK Innovation exercised a call option, included in the original agreement, to repurchase a portion of SK Enmove’s shares. SK Innovation sees growth potential in SK Enmove and considers this the optimal time to increase its stake in the company.
In July, SK Innovation announced the merger of SK On with SK Trading International and SK Enterm, aiming to improve SK On’s financial standing. As SK Trading International and SK Enterm are more stable with consistent cash flows and lower capital expenditures, the newly merged entity is expected to help the company achieve a financial turnaround.
It is focused on securing new supply contracts with major global automakers and boosting the production capacity of its plants worldwide. These efforts are part of the company’s plan to turn profitable by the end of this year, capitalizing on the growing demand for electric vehicle batteries.
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