Blue Oval SK, the U.S. battery production joint venture between SK On and Ford, will carry out a capital reduction. This aims to recover the existing investment funds following policy support from the U.S. government.

SK Innovation announced on the 15th that Blue Oval SK will implement a capital reduction worth $3.4 billion (approximately 4.9 trillion won). A representative from SK Innovation noted it is a "capital reallocation to enhance the efficiency of overseas investment capital."

Blue Oval SK construction site in Kentucky. / Courtesy of SK On

Capital reduction refers to the process of decreasing capital while returning the investment funds to shareholders. Last month, Blue Oval SK also conducted a capital reduction of $2.88 billion.

This decision for capital reduction is interpreted as being in response to the recent confirmation by the U.S. Department of Energy (DOE) of loan support worth up to $9.6 billion for Blue Oval SK. This financial support is provided under the Department's Advanced Technology Vehicles Manufacturing (ATVM) program, with interest rates at the level of U.S. government bonds.

The ATVM program is designed to support low-interest loans for manufacturers of automobiles and related components, established in accordance with the U.S. Energy Independence and Security Act of 2007.