SK Nexilis is said to be pushing to boost capital. With profitability in its copper foil business remaining weak amid a slowdown in the electric vehicle market's growth, the move is seen as an effort to shore up its financial structure through large-scale fundraising.
According to the investment banking (IB) industry on the 14th, SK Nexilis is planning to issue up to 800 billion won in hybrid securities. Specific terms, including the exact issuance size and interest rate, have not yet been decided.
The hybrid securities are reportedly being discussed under a structure in which major domestic securities firms underwrite the issuance and then resell the tranche to institutional investors. Hybrid securities have long maturities and, if certain conditions are met, can be classified as equity for accounting purposes, so corporations use them as a financing tool to improve their financial structure.
SK Nexilis, a wholly owned subsidiary of SKC, produces copper foil used in batteries for electric vehicles and energy storage systems (ESS). Copper foil is a core material used as the current collector for the anode of lithium-ion batteries. SK Nexilis operates production facilities in Jeongeup, North Jeolla Province, and in countries including Malaysia.
Recently, profitability has deteriorated due to the electric vehicle market's "chasm" (a temporary demand slowdown) and intensifying competition with Chinese companies. SK Nexilis' consolidated revenue last year was 506 billion won, up 59.3% from a year earlier, but it posted an operating loss of 191.8 billion won. Its net loss was 544.5 billion won. At the end of last year, liability was 2.3149 trillion won, up from the previous year, and the debt ratio was 172.7%.
However, copper foil sales have been recovering this year. SKC's copper foil business revenue in the second quarter was 254 billion won, the highest on a quarterly basis. The share of sales to North America rose to 67%, and sales of copper foil for ESS and electric vehicles also increased. SK Nexilis is focusing on improving cost competitiveness centered on its Malaysia production facilities and expanding sales in North America.