SK On raises $2 bn in bank loans for Hungary plant
Ik-Hwan Kim
Oct 13, 2022 (Gmt+09:00)
SK On's second plant in Hungary (Courtesy of SK On) SK On Co., a South Korean battery maker, has raised $2 billion in bank loans to build its third plant in Hungary, a regulatory body said on Thursday.
SK On’s Hungarian arm agreed on Wednesday to receive credit lines from eight banks, including the Export-Import Bank of Korea (KEXIM), Sumitomo Mitsui Banking Corp. (SMBC), BNP Paribas and Credit Agricole, according to the Financial Supervisory Service.
The credit lines, guaranteed by Seoul-based SK On, allowed the Hungarian subsidiary to draw up to $2 billion from the eight lenders when needed. It will spend the loans to build a plant in Ivancsa, Hungary.
In the long term, the world’s fifth-largest rechargeable battery maker plans to make 15 trillion won ($10 billion) worth of investments across the world. The figure is on top of the capital expenditure of 7.7 trillion won it had spent as of end-June.
SK On holds 3.4 trillion won ($2.4 billion) in cash and cash equivalents as of end-June. The fresh loans of $2 billion is expected to help the battery maker move forward with its facility expansion through next year.
The $2 billion in credit lines will likely increase its total borrowings to 11 trillion won. Excluding the new loans, the company’s debt-to-equity ratio soared to 300% as of end-June, compared with 132.5% at the end of last year.
Its accumulated losses will likely drive its debt-to-equity ratio further higher. The SK Group unit is predicted to remain in the red until the first quarter of next year.