SK E&S considers issuing preferred stocks worth W2 tril.

SK E&S company’s logo

By Anna J. Park

In a move to raise capital necessary for expanding business and investment abroad, SK E&S is said to be considering issuing new preferred stocks worth 2 trillion won ($1.8 billion).

The company, specialized in developing new and clean energy resources such as hydrogen, selected Bank of America (BoA), Morgan Stanley and Credit Suisse last month to receive financial consultations in the issuance of preferred stocks.

SK E&S has been involved in various overseas energy investment projects, such as gas field development. SK E&S also formed a strategic partnership with Plug Power earlier this year, as the SK energy provider arm made a $1.6 billion investment into the U.S.-based hydrogen fuel cell business.

However, due to these active investment projects, the SK energy subsidiary’s financial structure has been weakened, with its credit rating downgraded to AA from AA+ by Korea Ratings, as well as Korea Investors Service. The firm’s debt ratio also rose to 186 percent in 2020 from the previous year’s 152 percent, due to the increased debt.

This aggravating financial status made the company’s additional debt issuance almost implausible, leaving the option of issuing preferred stocks as an effective way to raise further capital for investment.

As of the end of the first quarter, the company’s quarterly revenue stood at 2.11 trillion won, with an operating profit of 259.2 billion won, which are 4.6-percent and nine-percent jumps, respectively, from the same period last year. The firm’s net profit also rose by 1.5 percent, to 215.7 billion won, for the first quarter.

While the company’s profit continues to increase, its total sum of liabilities exceeded 8.18 trillion won at the end of the first quarter, reaching an all-time high for the firm.