This article was displayed on the ChosunBiz MoneyMove (MM) website at 4:22 p.m. on Aug. 28, 2026.
As U.S. waste-battery recycling company Ascend Elements entered bankruptcy proceedings, an unexpected financial burden is expected to fall on SK ecoplant. That is because SKS Private Equity (SKS PE), which acquired Ascend equity from SK ecoplant, decided to exercise a put option it secured at the time of investment. As a result, a clause in which SK ecoplant agreed to make up investors' target rate of return to a certain level is increasingly likely to be triggered.
According to the investment banking (IB) industry on the 28th, SKS PE plans to exercise a put option related to the Ascend investment against SK ecoplant. If SKS PE exercises the put option, a clause kicks in under which SK ecoplant makes up the difference between the amount actually recovered from the Ascend investment and the originally agreed benchmark rate of return.
In 2024, SK ecoplant transferred its Ascend convertible preferred shares (CPS) to SKS PE. The transaction size was $98.23 million (about 131.6 billion won). In the process, SK ecoplant also provided a clause that would make up the shortfall if the limited partners (LPs) of the project fund formed by SKS PE failed to secure a certain level of rate of return. Considering Ascend's rising corporate value and initial public offering (IPO) plans, at the time it was a mechanism seen as unlikely to lead to an actual burden.
At the time, SKS PE also cited an IPO within three years for Ascend as the main exit scenario and was reported to have formed a project fund of about 140 billion won. During LP fundraising, the downside protection provided by SK ecoplant was highlighted as a key investment point. However, Ascend filed for Chapter 11 bankruptcy protection in the United States in April, and as liquidation proceedings followed, the IPO exit scenario collapsed.
Accordingly, the likelihood has grown that SKS PE's recovery will fall short of initial expectations. If the final recovery amount falls short of the benchmark rate of return under the agreement, SK ecoplant must cover the difference. A mechanism originally set to protect investors has, with Ascend's bankruptcy, become a factor for additional cash outflows at SK ecoplant.
This burden is also evident in SK ecoplant's recent financial statements. In its semiannual report, the company said it entered into an agreement to make up the difference to the buyer if certain conditions related to the sale of Ascend convertible preferred shares were not met. As a result, it recognized 102.866 billion won as a derivative liability as of the end of the first half.
However, 102.866 billion won does not mean the entire amount SK ecoplant is definitively required to pay SKS PE. Because the amount represents the fair value of the agreement recognized as a liability as of the end of the half year, the actual settlement could vary depending on Ascend's final recovery and the contractual terms.
Meanwhile, SK ecoplant has mostly unwound its Ascend equity. In 2024, it held 9,223,555 shares (6.72%) of Ascend. The company decided in September of the same year to dispose of all its holdings and proceeded by selling part of the equity first and then clearing the remaining equity.
In 2025, SK ecoplant disposed of 6,285,000 shares to SKS PE. As the equity unwinding continued, as of the end of June this year SK ecoplant's Ascend holdings had fallen to 26,025 shares (0.92%). The book value of this equity is 0 won. During the first half, the company recognized 11.982 billion won in impairment loss on Ascend investment assets.