SK Innovation will issue 600 billion won in convertible bonds. The move is to acquire SK On equity held by financial investors (FI).
On the 22nd, SK Innovation held an extraordinary board meeting and approved the issuance of bearer, unsecured private convertible bonds for the purpose of acquiring other corporations' securities. The issuance size is 600 billion won with a zero-coupon condition. The maturity is two years, until Oct. 31, 2027. A consortium led solely by Korea Investment Private Equity (hereafter HanTwo PE) participated in this CB issuance.
This CB issuance is linked to the merger of SK On and SK Enmove and the settlement of FI equity. In a board meeting in July, SK Innovation resolved to merge SK On and SK Enmove and to acquire the entire FI investment of about 3.588 trillion won. SK Innovation plans to use the proceeds from the CB to acquire the SK On equity held by FIs.
By taking this CB, HanTwo PE will continue its partnership with SK Group. HanTwo PE invested 800 billion won in SK On's pre-IPO in 2022 and added 400 billion won in a follow-on investment in 2023. This CB acquisition reinvests part of the existing investment in the form of convertible bonds.
This year, SK Innovation has been actively bolstering capital. SK On and SK IET have decided on rights offerings of 2 trillion won and 300 billion won, respectively. SK Inc. will directly contribute 400 billion won of SK Innovation's 2 trillion won rights offering, with the remaining 1.6 trillion won supported in the form of price resettable securities (PRS).
An SK Innovation official said, "This convertible bond issuance is a strategic decision to secure SK Innovation's financial soundness and strengthen SK On's competitiveness. As FIs decided to reinvest based on their trust in the future growth potential of SK Innovation and SK On, we will further strive to enhance the competitiveness of the battery business and improve our financial structure."