SEOUL, April 11 South Korea's top refiner SK
Corp. 003600.KS said on Wednesday it would split into two firms
as it adopts a holding company structure in July to reorganise
cross-shareholdings among the many SK Group affiliates.
SK Corp., valued at 11.96 trillion won ($12.8 billion) at
Wednesday's closing share price, will be divided into two firms.
The bigger entity will be an operating company specialising
in the energy business. The smaller will be a holding company
which will incorporate SK's life science business and the shares
of its affiliates whose activities range from chemicals to
construction to telecoms.
The holding company, to be tentatively named SK Holdings Co.
will keep SK Corp's existing listing on the Korea Stock Exchange.
The operating company will be renamed SK Energy-Chemical Co.,
Ltd. and will be newly listed. Dates were not given.
Shares in SK Corp. will be suspended from June 28. A date for
the listing's resumption was unknown.
The split ratio of operating company to holding company is
71:29. Existing SK Corp. shareholders will receive shares of each
company based on the split ratio of net assets, it said.
Fitch Ratings said the transaction is expected to reduce SK's
net debt by 1.95 trillion won and that the simplification of the
ownership structure should limit risk from affiliates that are
not directly linked to SK core business.
"Fitch has historically viewed SK's exposure to...risk from
troubled affiliates as a negative rating factor and therefore
takes a positive view of the announced reorganisation," said
Mikyung Kwon, director in Fitch's Asia-Pacific energy and
Despite reforms brought in after the 1997-98 Asian financial
crisis, some conglomerates are still run like family businesses,
shifting money among group companies and using complex share
ownership networks to control their businesses.
In 2003, SK Corp. chairman Chey Tae-won got a three-year jail
term for a $1.2 billion accounting scandal and illegal stock
dealings at subsidiary SK Global, now renamed as SK Networks
(001740.KS), though the sentence was suspended in 2004.