SK E&S Sells Stake in Chinese Private Gas Company Amid Concerns Over Deteriorating Financial Structure

[Asia Economy Reporter Park Soyeon] SK E&S, which faced concerns over deteriorating financial structure, has sold all its shares invested in a Chinese private gas company.

On the 17th, SK E&S announced that it sold all 10.25% (535.03 million shares) of its stake in China Gas Holdings (CGH) through an off-hours block deal on the Hong Kong Stock Exchange the previous day.

The sale price was determined at an 11.1% discount from the closing price on the contract date through demand forecasting, and the total sale amount was 1.814 trillion KRW.

The stake in China Gas Holdings was repeatedly bought and sold by SK Group’s gas affiliates, including SK E&S’s purchase of 5.9% in 2007 and SK Gas’s acquisition of 4.49% in 2010.

Previously, SK E&S also sold a 3.3% stake in China Gas Holdings for 786.8 billion KRW in September last year.

SK E&S stated that the complete sale of its stake this time was aimed at improving its financial structure.

Recently, energy companies have been facing concerns over worsening financial indicators due to a sharp decline in demand and profitability caused by the COVID-19 pandemic.

International credit rating agency Standard & Poor’s (S&P) pointed out in a report on the 13th of last month that SK E&S’s investment in the Australian LNG project would intensify pressure on financial indicators such as capital expenditure and increased borrowings, potentially further reducing the capacity to maintain its credit rating.

In February, S&P also stated that SK E&S’s announcement of paying 730 billion KRW in dividends significantly exceeded the previously expected range of 300 to 500 billion KRW, indicating a reduced capacity to maintain its credit rating.

This content was produced with the assistance of AI translation services.