(Photo= Yonhap news)

 

[Alpha Biz= Reporter Kim Sangjin] SK Innovation is exploring the possibility of infusing additional funds into its subsidiary, SK On, through stock liquidity measures.

On August 8, investment banking sources revealed that SK Innovation is discussing a plan to raise around 1 trillion won using stock liquidity techniques with major securities firms. One approach under consideration is a stock price return swap (PRS) involving SK On shares, either from existing holdings or newly issued shares.

PRS is a derivative product where the return is based on the value fluctuation of the underlying asset, in this case, SK On's stock. If the stock value at settlement is higher than at the contract's inception, the difference is retained by the company. Conversely, if the stock value falls, the company must compensate the investor for the loss.

The use of PRS is being considered as a way to reduce financial burden since the funds raised through this method are not recorded as debt. Instead, shares are sold to a special purpose company (SPC) set up by the securities firm, thereby avoiding a direct impact on SK Innovation’s balance sheet.

 

 

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