SEOUL– South Korean battery maker SK On Co. said Thursday it has secured US$2 billion in loans and guarantees from three export credit agencies and will use the funds for investment in Hungary.
Euler Hermes, a German trade credit insurer, and the Seoul-based Korea Trade Insurance Corp. will provide $800 million and $700 million worth of credit insurance, respectively, SK On said.
The Export-Import Bank of Korea will provide the battery maker with $200 million in a loan guarantee and $300 million in a direct loan.
SK On, which was split off from its parent firm, SK Innovation Co., last year, counts Volkswagen A.G., Ford Motor Co. and Hyundai Motor Co. among its clients.
Based on these guarantees and credit insurance, SK On will take out long-term loans from seven foreign commercial banks starting next month, it added.
An ECA is a private or quasi-governmental financing agency that works as an intermediary between governments and exporters to issue export insurance and guarantees for financing.
The financing can either be made in direct lending or indirect loans whereby the ECA lends funds to commercial banks, which in turn, extend loans to the company. Such a method of financing is beneficial to companies since they can borrow the money at lower rates.
SK On said it plans to use the funds for its new factory being built in the Hungarian city of Ivancsa. SK On is investing 3.31 trillion won (US$2.54 billion) in the factory that will have an annual production capacity of 30 gigawatt hours (GWh) starting in 2024, enough for 430,000 electric vehicles.
SK On aims to increase the global production capacity to 77 GWh by the end of this year and 500 GWh by 2030.
Source: Yonhap News Agency