Credit Rating Agencies Place SK Enmove Under Downgrade Watch, Citing Lower SK On Creditworthiness

Credit Rating Agencies View Existing Bonds Negatively After SK Enmove and SK On Board-Approved Merger Decision

On July 31, the three major credit rating agencies assessed that SK Enmove's decision to merge with SK On, which has a relatively lower credit rating, is negative for the creditworthiness of SK Enmove's existing bonds.

Previously, SK Enmove and SK On announced through a public disclosure the previous day that their boards of directors had resolved to proceed with a merger. The merger date is set for November 1, and SK On, as the surviving entity, will absorb SK Enmove.

Korea Ratings stated that it has placed SK Enmove's unsecured corporate bonds and commercial papers under a downward rating watch. The previous ratings were 'AA/Stable' for unsecured bonds and 'A1' for commercial papers.

Korea Ratings explained that this adjustment "reflects the creditworthiness of SK On, which is scheduled to absorb SK Enmove through the merger," and added, "After the merger process is completed, the credit ratings for SK Enmove's unsecured bonds and commercial papers will be withdrawn, and the transferred unsecured bonds will be reassessed based on the creditworthiness of the merged entity." Korea Ratings currently assigns SK On credit ratings of 'A+/Stable' for unsecured bonds and 'A2+' for commercial papers.

NICE Investors Service also stated that the merger is "negative for the creditworthiness of SK Enmove's existing bonds," and placed them under a downward rating watch. The agency explained, "SK On's credit rating is 'A+/Stable', which is lower than SK Enmove's 'AA/Stable'," and added, "Given the scale of SK On, it is highly likely that the merged entity's credit rating will be lower than SK Enmove's current creditworthiness."

Korea Investors Service also reported that it has adjusted the credit ratings for SK Enmove's unsecured bonds and commercial papers from 'AA/Stable' and 'A1' to 'AA/Under Negative Review' and 'A1/Under Negative Review', respectively.