SK On to Assume 2 Trillion Won in U.S. Subsidiary Debt, Easing External Financing Burden

[Financial News] SK On is pursuing the assumption of approximately 2 trillion won in debt from its U.S. battery subsidiary, SKBA, to reduce the subsidiary's external financing burden. The parent company will directly assume debt that the subsidiary owes to external creditors and account for the same amount as a loan to the subsidiary. This will support the U.S. subsidiary's financial restructuring without any actual transfer of funds.
SK On announced on the 29th that it had decided to assume the principal and interest payment obligations on $1.5 billion in overseas bonds issued by SKBA, equivalent to approximately 2.028 trillion won.
The bonds consist of $500 million maturing in January 2027 and $1 billion maturing in January 2029. The assumed debt amounts to 14.05% of SK On's consolidated equity at the end of last year.
The transaction will proceed on the condition that the necessary consent to change the issuer is secured at bondholders' meetings scheduled for the end of October. Once the transaction closes following bondholder approval, SK On will directly assume the obligation to repay the principal and interest on the existing overseas bonds.
At the same time, SK On will account for having lent SKBA an amount equal to the principal of the overseas bonds. Accordingly, SKBA's existing borrowing under the overseas bonds will be converted into borrowing from SK On. No actual drawdown of the loan will occur in the process.
Rather than eliminating SKBA's debt, the measure changes its creditor from external investors to the parent company. It is intended to ease the U.S. subsidiary's financial burden by having the parent assume its external repayment obligations.
An SK On official explained, "The purpose is to ease the external financing burden by converting SKBA's external capital-market debt into borrowing from SK On."
[email protected] Dong-ho Kim Reporter