According to sources from the battery and investment banking (IB) industries on March 24, it has been confirmed that SK on is in the final stages of securing US$1.1 billion in funding.
Firstly, SK on secured a US$400 million loan through Shinhan Bank last month, which was then transferred to its U.S. subsidiary. Additionally, Standard Chartered (SC) is currently leading a syndicated loan, which refers to a group loan arranged by multiple financial institutions, to raise US$700 million for the firm. SC is contributing US$200 million, while the rest is reportedly being participated by other banks.
SK on, which plans to invest 7.5 trillion won (US$5.57 billion) in capital expenditures this year, is leveraging its recent fundraising efforts for a comprehensive range of funding, including pre-IPO, or pre-listing equity investment, and policy financing loans from the U.S. government. In fact, SK on has recently commenced fundraising efforts with Morgan Stanley, Bank of America, and JP Morgan as joint lead managers. The goal is to raise 1 to 2 trillion won through pre-IPO investments.
In the first half of the year, the company will receive policy financing loans administered by the U.S. Department of Energy (DOE). The Advanced Technology Vehicles Manufacturing (ATVM) program provides up to 80 percent of the construction costs for factories to companies investing in environmentally friendly initiatives. BlueOval SK, a joint venture between SK on and Ford Motor Company for battery production, was approved for funding of up to US$9.2 billion with low interest rates in the United States last year, but it has yet to be executed.
The problem lies in the volatile market conditions. With the slowdown in electric vehicle demand compounded by the U.S. presidential election, the pace of electric vehicle adoption is being adjusted accordingly. Some suggest that changes may occur in investment road maps as a result.