SK On raises $2 bn in bank loans for Hungary plant

SK On Co., a South Korean battery maker, has raised $2 billion in bank loans to build its third plant in Hungary, a regulatory body said on Thursday.

SK On’s Hungarian arm agreed on Wednesday to receive credit lines from eight banks, including the Export-Import Bank of Korea (KEXIM), Sumitomo Mitsui Banking Corp. (SMBC), BNP Paribas and Credit Agricole, according to the Financial Supervisory Service.

The credit lines, guaranteed by Seoul-based SK On, allowed the Hungarian subsidiary to draw up to $2 billion from the eight lenders when needed. It will spend the loans to build a plant in Ivancsa, Hungary.

In the long term, the world’s fifth-largest rechargeable battery maker plans to make 15 trillion won ($10 billion) worth of investments across the world. The figure is on top of the capital expenditure of 7.7 trillion won it had spent as of end-June.

SK On holds 3.4 trillion won ($2.4 billion) in cash and cash equivalents as of end-June. The fresh loans of $2 billion is expected to help the battery maker move forward with its facility expansion through next year.

The $2 billion in credit lines will likely increase its total borrowings to 11 trillion won. Excluding the new loans, the company’s debt-to-equity ratio soared to 300% as of end-June, compared with 132.5% at the end of last year.

Its accumulated losses will likely drive its debt-to-equity ratio further higher. The SK Group unit is predicted to remain in the red until the first quarter of next year.

The debt funding is separate from SK’s efforts to raise 2 trillion-3 trillion won in pre-IPOs from financial investors.

Write to Ik-Hwan Kim at Lovepen@hankyung.com
Yeonhee Kim edited this article