SK D&D has launched a large-scale capital increase to secure financial stability, just one year after its governance structure changed from a subsidiary of the SK Group to a private equity fund.
According to a disclosure on August 9, SK D&D's board approved a shareholder allocation capital increase of 136.7 billion won on July 28. However, the Financial Supervisory Service has halted the process by requesting corrections to the securities registration statement.
The funds raised will be used to repay 62 billion won in private bonds maturing in October and to address 75.3 billion won in contingent liabilities related to the Gunpo Triarts Knowledge Industry Center. The largest shareholder, Han & Company, has expressed its intention to subscribe to 100% of the allocated shares, with expectations of investing over 100 billion won directly.
Financial indicators reveal significant burdens. Operating profit is projected to decline from 177.6 billion won in 2023 to 53.7 billion won in 2024 and 37.8 billion won in 2025, marking three consecutive years of decrease. In the first quarter of this year, the company recorded an operating loss of 9.3 billion won. Last year, cash flow from operating activities also turned into a net outflow of 265.2 billion won. Although the debt ratio decreased from 218.0% in 2023 to 174.2% in 2025 and 163.7% in the first quarter of this year, the deterioration in profitability and cash generation remains a concern.
In the meantime, SK D&D has diversified its funding sources for development projects through REITs and institutional investor funds. It sold an 83.3% stake in the Seoul Forest Office PFV to Shinhan Asset Management through the jointly invested 'Shinhan RE Balancing Fund' at the end of last year, and completed the sale of the 'Xireune' mixed-use development at Gongdeok Station using the 'Shinhan PF Normalization Fund' co-invested with Shinhan Financial Group and the Korea Asset Management Corporation (KAMCO). The redevelopment project of the Namdaemun Samboo Building, 'Episode Namsan,' is also underway through the same fund.
Efforts to liquidate assets are ongoing. Contracts have been signed for the sale of properties including the Myeongdong N Building, Chungmuro Office, land in Jinjeop, Icheon logistics center, Shinseadong office 'Canvas Lab,' and the Myeongdong Cheonghui Building hotel. The transition from planning to actual sale is a positive factor for liquidity.
However, PF contingent liabilities remain a burden. Of the total required funds of 330.5 billion won for Gunpo Triarts, SK D&D's share is 75.3 billion won, which is a major use of the current capital increase. The maturity of the interim payment loan for buyers is scheduled for October 23. The Guro Think Factory has completed interim payment substitution, but there remains an unsold collateral loan of 165 billion won.
The company stated, "With receivables and unsold inventory amounting to about 570 billion won, which exceeds the loan amount, we believe that cash recovery is possible through sales promotion measures." However, the time required for actual cash recovery remains a concern.
This capital increase reflects the new largest shareholder's commitment to responsible management. Han & Company’s decision to participate in 100% of the allocated shares indicates a willingness to shoulder financial burdens even after separating from the SK Group.
Conversely, there has been backlash from minority shareholders regarding the shift from a voluntary delisting and public buyout process to a large-scale capital increase. While the intention to provide financial support is positive, restoring trust among minority shareholders during the governance change remains a challenge.
Korea Credit Rating Agency assessed that if the capital increase proceeds smoothly, it will improve short-term liquidity to address the repayment of private bonds and funding needs related to PF contingent liabilities in the second half of the year. SK D&D's current invested project equity amounts to approximately 366.2 billion won, primarily focused on key locations in Seoul such as Dangsan Station, Seongsu, and Seoul Station.
* This article has been translated by AI.
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