이 기사는 2021년 04월 20일 07:46 thebell 에 표출된 기사입니다.

A sale process of a minority stake in SK Lubricants will likely take more time due to slow negotiations between potential buyers and SK Innovation (SKI), the parent of the company, as concerns are growing over SKI’s credit rating.

The talks between SKI and select bidders are in final stages but they are struggling to come to an agreement, according to industry sources.

About five weeks ago, all four shortlisted bidders – IMM Private Equity, Apollo Global Management, Korea Investment Partners and Japanese petroleum and metals conglomerate ENEOS – submitted binding offers to buy up to 49% of SK Lubricants, which is wholly owned by SKI.

There was reportedly little difference in bid prices. The biggest hurdle for the deal is seemingly related to downside protection, which the bidders are expecting from SKI, industry watchers said.

In January, Moody’s downgraded the credit rating of SKI from Baa2 to Baa3, the lowest investment grade, citing “prolonged softness in its core businesses as well as elevated capital spending.”

This rating action has raised concerns among the shortlisted bidders, making them take a more conservative approach to assessing SKI’s financial condition during due diligence and thereby ask SKI for stronger downside protection.

The bidders are especially worried about the possibility of a further credit downgrade, industry watchers said. This, if happens, would trigger an event of default on SK Battery America’s loans guaranteed by SKI, forcing SKI to pump cash into its US subsidiary to help repay the debt earlier.

The sale process began more than six month ago. SKI received non-binding offers from about seven bidders in November and shortlisted four bidders in December. (Reporting by Hee-yeon Han)