SK, SKT, and SK Broadband Initiate 1 Trillion Won Corporate Bond Issuance
Funds for Debt Repayment and Equity Acquisition
Group's Largest Ever Corporate Bond Issuance
2 to 3 Times Larger Than Hanwha, Lotte, and LG
This year, the amount of corporate bonds issued by SK Group affiliates is expected to exceed 12 trillion won. As of mid-November, the total issuance surpassed 11 trillion won, and SK, SK Telecom, and SK Broadband have begun preparations to issue approximately 1 trillion won in public bonds. Despite not raising funds for a while due to the merger of SK Innovation and SK E&S, they are set to issue the largest-ever amount of corporate bonds.
SK, SKT, and SK Broadband to Issue Around 1 Trillion Won in Corporate Bonds
According to the investment banking (IB) industry on the 21st, SK, SK Telecom, and SK Broadband are planning to issue corporate bonds totaling around 1 trillion won. SK has selected Samsung Securities and Mirae Asset Securities as lead underwriters, while SK Telecom and SK Broadband have chosen SK Securities and Korea Investment & Securities. All three companies plan to complete final fundraising by early December after conducting demand forecasts targeting institutional investors.
SK affiliates plan to use most of the raised funds to repay maturing borrowings. SK has corporate bonds worth 210 billion won maturing at the end of this month and early December. SK Telecom faces maturities of 100 billion won and 130 billion won on December 13 and January 13, respectively. SK Broadband must respond to a 100 billion won corporate bond maturity in January next year.
It is expected that SK Telecom will use the remaining funds after debt repayment to acquire the remaining shares of SK Broadband. The financial burden increased as SK Telecom decided to invest about 1.15 trillion won to acquire 24.76% of SK Broadband shares held by Taekwang Industrial and Mirae Asset. They plan to secure part of the acquisition funds through the sale of non-core assets and raise the rest through corporate bond issuance.
On the 13th, SK Telecom signed a stock purchase agreement to acquire all shares of SK Broadband. The share acquisition is scheduled to be completed by May next year. Once the acquisition is complete, SK Telecom will hold 99.1% of SK Broadband shares.
SK Group’s Corporate Bond Fundraising Expected to Exceed 12 Trillion Won
With these three companies issuing corporate bonds ahead of the year-end, SK Group’s total corporate bond issuance this year is expected to exceed 12 trillion won. As of this day, SK Group has issued corporate bonds totaling 11.1375 trillion won. With an additional 1 trillion won in bonds planned for December, the total issuance will increase significantly.
Among the group affiliates, SK E&S, which recently issued 2.8 trillion won worth of private bonds at once, has issued the most corporate bonds. The holding company SK follows with 1.21 trillion won. The amount of fundraising increased as SK supported SK Innovation, which had a heavy financial burden as the parent company of SK On.
SK On issued 800 billion won, while SK Incheon Petrochem and SK Hynix issued corporate bonds in the 700 billion won range. SK Innovation has not issued corporate bonds since August due to the merger with SK E&S. Its cumulative corporate bond issuance this year stands at about 550 billion won.
An IB industry official said, "SK Group temporarily halted corporate bond issuance from September due to uncertainties during the merger process of SK Innovation and SK E&S. However, as other funding needs, including maturing borrowings, continued, affiliates requiring funds are issuing bonds toward the end of the year."
SK Group has become one of the largest issuers of corporate bonds among large conglomerates this year. It issued three times the amount of corporate bonds compared to Hanwha Group, Lotte Group, and LG Group, which each issued around 4 trillion won this year. An industry insider evaluated, "SK Group has increased corporate bond issuance annually through investments in petrochemicals, batteries, and semiconductors. With affiliate earnings not improving, maturing borrowings continue to come due, forcing them to keep increasing external borrowings."
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