SKC (KRX:011790) has agreed to guarantee principal and interest on 850 billion won private placement bond-type hybrid securities issued by its subsidiary SK Nexilis, according to a bourse filing on Tuesday.
The securities are split into a 530 billion won first tranche and a 320 billion won second tranche, with payment scheduled for Sept. 29.
They carry interest rates of 6.860% and 7.325%, mature in 2056 with no limit on extensions, and will be acquired by six investor special purpose companies (SPCs).
In a separate filing, SKC has agreed to back principal and interest on the 850 billion won, using the SK Nexilis hybrid securities as collateral.
If an SPC runs short of cash and requests support, SKC may choose whether to step in, and if it does, it will lend the shortfall amount to the SPC.
SKC's support obligation runs from the cash deficiency support agreement date until the loans are fully repaid, during which it will earn fees from the SPCs based on a fair valuation.
SK Nexilis is a major subsidiary of SKC, representing 54.23% of SKC's consolidated total assets, with total assets of approximately 3.66 trillion won.