SK Innovation to inject $1.6 bn into SK On's rights offering

South Korea's top refiner SK Innovation Co. said on Dec. 21 it will invest 2 trillion won ($1.6 billion) in its electric battery maker unit SK On Co. as the subsidiary will execute a 2.82 trillion won rights offering by issuing new shares. 

The parent company will inject 1 trillion won on Dec. 23 and invest the same amount of capital on January 30, 2023, according to its company disclosure. Seoul-based financial investors, including Korea Investment Private Equity and EastBridge Partners, put in the remaining 824.3 billion won of the rights offering on Dec. 21.    

The financial investors' funding may reach as high as 1.32 trillion won, according to SK Innovation’s disclosure on Nov. 30.

SK On will use the proceeds to boost overseas battery production, the parent company stated.

The electric battery maker is expanding its manufacturing facilities globally, breaking ground for a plant with Ford Motor Co. in Kentucky earlier this month and raising $2 billion in bank loans to build its third plant in Hungary in October. SK On is also aiming for an initial public offering in 2026.

SK On had aimed to raise 4 trillion won early this year from private equity firms. However, it reduced the target fund size as some foreign PE firms decided not to join the fundraising amid global interest rate hikes. 

SK On said in the third-quarter audit report that it will invest an additional 13.77 trillion won in manufacturing facilities. 

SK Innovation is expected to take out a loan for the 2 trillion won financial support as the parent company's cashable assets were 1.4 trillion won as of end-September on a separate financial statement.

The refiner is highly likely to execute dividends in kind at the end of this year, by distributing stocks rather than cash due to its tight financial conditions.

Write to Ik-Hwan Kim and Jae-Fu Kim at lovepen@hankyung.com
Jihyun Kim edited this article.