Financial institutions from Korea and Germany will provide a guarantee and insurance
Loans will be received from overseas commercial banks starting next month
Terms of repayment in equal installments

SK On secured KRW 2.62 trillion in funds to establish a large-scale battery plant in Europe.

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SK On announced on the 28th that it had secured $2 billion (KRW 2.624 trillion) in investment from a German trade insurance agency, Euler Hermes, Korea Trade Insurance Corporation, and Export-Import Bank of Korea. The three institutions support SK On by providing a guarantee or insurance in the process of getting loans from overseas commercial banks.

Euler Hermes and Korea Trade Insurance Corporation will provide $800 million and $700 million, respectively, and Export-Import Bank of Korea will provide $200 million. Export-Import Bank of Korea will also lend $300 million to SK directly.

Starting next month, SK On plans to sequentially withdraw funds from seven overseas commercial banks. The funds are in the form of long-term loans with a two-year grace period and five-year equal installment.

SK On has been negotiating with three institutions and overseas commercial banks since it was established through a physical spin-off in last October. All three institutions providing finance are 'Export Credit Agencies (ECA)’. ECA supports the export of domestic companies and provides loans directly to companies to create national interests by providing guarantees or insurance in the loan process. Simultaneously, the institutions will have appealing interest rates.

The $2 billion investment that SK On secured is the largest ECA deal for a global battery manufacturer, and is the largest sum that Euler Hermes provided to a Korean company. SK On has been highly evaluated not only for the large amount of orders it has already secured from auto manufacturers, but also for representing a green business that works towards reducing carbon emission.

Export-Import Bank of Korea and Korea Trade Insurance Corporation evaluated highly for SK On's European battery business as contributing to national interest. Euler Hermes also praised SK On for applying its batteries to the export of Volkswagen's electric vehicles to overseas markets.

SK On will invest the funds in the third European plant that is under construction in Ivancsa, Hungary. The total sum of investment for the Ivancsa plant KRW 3.31 trillion won, and the plant is expected to produce 30GWh batteries annually from 2024.

Pre-IPO, which is currently being pursued, is also expected to stand on a more favorable position as SK On secures large-sum of investment.

SK On ranked 9th in global battery market share for the first time in 2019. It also raised its standing to 5th in 2021, the first time in two years. There are currently three new plants under construction in the US, Europe, and China. SK On plans to increase the production capacity of 1.7GWh in 2017 to 77GWh by the end of this year, and to 220GWh by 2025 with these plans.

An SK On finance official said, "This funding will be the key factor for SK On to leap forward as a top-tier global company."

By Staff Reporter Tae-joon Park (