SK seeks to securitize Boryeong LNG stake without principal guarantee

SK seeks to securitize Boryeong LNG stake without principal guarantee

최초입력 2025.07.30 11:26:07

SK Innovation E&S CI

SK Innovation E&S plans to raise about 600 billion won ($432 million) by securitizing its 50 percent stake in the Boryeong LNG Terminal - but without offering investors a principal guarantee. Instead, the company is proposing an internal rate of return (IRR) of 7 to 8 percent annually over the next 22 years. While the structure promises steady cash flows backed by long-term contracts, industry observers note that the absence of principal protection could deter potential investors.
According to investment banking sources on Tuesday, SK Innovation E&S is presenting the deal as a long-term opportunity with stable returns, based on guaranteed revenue from continued terminal use. However, the company is refraining from guaranteeing principal repayment, as doing so would require the investment to be classified as debt on SK Innovation’s balance sheet - counter to its financial restructuring efforts.
This is a departure from the firm’s previous securitization deals. In its past LNG power generation project with Meritz Securities and the urban gas supply business acquired from KKR, SK Innovation E&S offered principal protection along with a set IRR. Meritz committed 5 trillion won to the LNG project in return for guaranteed principal and a 5-percent IRR, for example.
The latest offering is viewed as unusually risky by many in the investment community. “It is hard to expect infrastructure funds to proceed with capital injections without any form of principal protection,” an industry insider said.
Potential investors reportedly include Macquarie Asset Management, BlackRock, IMM Investment, and Brookfield. Macquarie operates listed infrastructure funds with lower target yields compared to private equity, while IMM holds a 49 percent stake in GS Power, a subsidiary of GS Energy - which co-owns the terminal.
Standard Chartered Securities, which is managing the deal, plans to hold a preliminary bid in early August 2025. The 50 percent stake being sold belongs to SK Innovation E&S, while management rights will remain with GS Energy.
Formed in 2013 as a joint venture between SK Innovation E&S and GS Energy, Boryeong LNG Terminal imports, stores, and regasifies liquefied natural gas for supply to power plants and petrochemical firms. Group affiliates such as SK Energy, SK E&S, Narae Energy Service, GS EPS, GS Power, and GS Caltex are all long-term customers of the facility.
The terminal has been generating stable cash flows, with annual EBITDA totaling around 200 billion won. SK Innovation E&S’s move to monetize the asset is part of its broader effort to strengthen its financial structure.
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SK seeks to securitize Boryeong LNG stake without principal guarantee

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