[Seoul=Newsis] SK Innovation CI. (Photo = SK Innovation) July 21, 2024 photo@newsis.com * Redistribution and DB prohibited.
According to the domestic credit rating agencies regarding the merger of SK Innovation and SK E&S, they evaluated that “through diversified business bases, they can contribute to the stability and financial stability of the business.”
According to the credit rating industry on the 21st, following the merger decision of SK Innovation and SK E&S announced on the 17th, credit rating agencies stated, “There will be no immediate credit rating changes, but the business portfolio will diversify and cash flow will be strengthened.”
Korea Ratings stated, “The absorption merger of SK E&S by SK Innovation can contribute to the stability of the business through diversified business bases within the energy sector,” and they also expected that “strengthened cash flow after the merger will also positively affect SK Innovation’s credit due to relieving SK On’s borrowing burden and poor operating performance.”
Moreover, they assessed that “the visible operating performance in the battery sector and the stability of the financial structure based on corporate public offerings (IPO) will be significant determining factors for SK Innovation’s credit rating after the merger.”
Korea Investors Service also evaluated, “With this merger, as SK Innovation’s focus areas such as refining, chemicals, and secondary batteries are complemented, the business portfolio on a consolidated basis will diversify and operating cash flow will improve.”
Regarding the RCPS (Redeemable Convertible Preference Shares) issued by SK E&S, they evaluated that “The impact on financial stability will be limited, considering the expected capital size of the merged entity at around 40 trillion won even if the RCPS redemption burden becomes a reality.”
Regarding the merger of SK On, SK Trading International, and SK Entem, they forecasted that “the merger will have some positive effects due to the alleviation of borrowing burdens and support for operating performance, resulting in reduced downward pressure on SK On’s credit rating.”
However, Korea Investors Service also expressed the opinion that the merger is not all advantageous. They emphasized the need for additional financial burden relief through internal business fundamental improvement and countermeasures for credit defense. They also added, “Although the immediate improvement in the financial structure through the merger effect is not significant, capital expansion may increase if the enterprise value is enhanced and the IPO timeline is advanced.”
Meanwhile, SK Innovation and SK E&S held board meetings on the 17th and resolved the merger proposal between the two companies. If the merger proposal is approved at the shareholders’ meeting scheduled for the next 27th, the merged entity will officially launch on November 1st.