[Photo provided by SK E&S Co.]
SK E&S Co. is set to raise 2 trillion won ($1.7 billion) in new capital through issues of redeemable convertible preferred shares as shortlisted candidates all eagerly subscribed to the offering.
The candidates, eligible to become the second largest shareholder of the country’s biggest private city gas supplier and clean energy flagship of SK Group eying to transform its mainstay from gas to hydrogen and other renewables, are Kohlberg Kravis Roberts & Co. (KKR), IMM Private Equity, Glenwood Private Equity, and EMP Belstar, according to industry sources. They had been shortlisted from a preliminary tender held last month.
SK E&S plans to pick a preferred bidder by early November to raise funds within the year.
Redeemable convertible preferred stock allows the issuer to buy it back at a specific price and gives the buyer an option to convert the shares into a fixed number of common shares after a pre-determined date. If the SK E&S’s dividend-paying preferred shares are converted to common shares, the owner becomes the second largest shareholder in the company.
SK E&S is selling the shares to fund its renewable energy projects. Playing a central role in SK Group’s plan to bump up the group’s hydrogen energy production capacity to 280,000 tons by 2025, SK E&S aims to build the world’s largest hydrogen liquefaction plant within its sister SK Incheon Petrochem Co.’s manufacturing base by 2023.
The four bidders all have outlined big business plans for the company as a strategic partner.
KKR is said to have proposed to back SK E&S in its efforts to grow the company’s renewable energy business at the global level, while IMM Private Equity has offered a deal for stable returns.
Some of the bidders reportedly are demanding the company to include an option to receive shares in SK E&S’s city gas subsidiaries instead of cash when redeeming their investment.
SK E&S is the largest city gas supplier in Korea with seven subsidiaries. Its city gas division is estimated to be worth 3 trillion won in total.
SK E&S is unlisted and controlled by SK Group’s holding entity SK Inc. The company earned 5.7 trillion won in revenue last year with nearly half generated by the city gas business.
By Park Chang-young, Kang Woo-seok and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]