The prospects of domestic credit rating agencies were mixed over SK Shielders, which changed its owner to a private equity fund ( PEF ). Korea Investors Service evaluated that the possibility of SK Group’s support for SK Shielders, which was the largest shareholder, was ruled out, while Korea Ratings evaluated that the possibility of application was still high. The evaluation of the aftermath of the interest rate hike caused by new borrowings for acquisition finance was also mixed. The Han Shinpyeong was concerned that increasing interest expenses would affect SK Shielders’ finances. Han Gi-pyeong showed conflicting views, saying that it would only be limited. According to the credit rating industry on the 31st, Hanshinpyeong downgraded SK Shielders’ credit rating by one notch from ‘A0 · Downgrade Review’ to ‘A- · Stable’ on the 25th . We downgraded the credit rating by one notch , excluding the ‘possibility of emergency support by affiliates’, which was reflected in the existing credit rating . Due to the nature of the PEF , the decision to support the acquiring company could change depending on economic and strategic judgments. According to the Korea Financial Investment Association, as of the 27th, A0 and A-

There is a difference of about 45bp in the average public rating of 3-year publicly offered corporate bonds.

On the other hand, Han Ki-pyeong announced a report on the 28th that maintains the existing rating ‘A0 · Stable’. While removing the possibility of affiliate support from SK Group, it was noted that SK Shielders maintains close business links with SK Group. This is because SK Square, as the second-largest shareholder, participates in the composition of the  SK Shielders board of directors and the management decision-making process.

Previously, on the 20th, the largest shareholder of Korea Security Holdings (KSH), which owns a 100 % stake in SK Shielders, was changed from SK Square to Soteria Bidco SCSp , a PEF . Soteria Vidco is a one-time special purpose company ( SPC ) established by EQT Partners to acquire SK Shielders . EQT Partners is SK

Square acquired a 31.1% stake in SK Shielders and the entire stake held by Macquarie Asset Management Consortium, making it the largest shareholder of SK Shielders with a 68% stake. SK Square maintains the second largest shareholder with a 32% stake. 

SK Shielders is an information security service company established in June 2000. EQT Partners plans to expand its unmanned store solution business and AI CCTV- based security service business early. In addition, it is planning to  create synergies with global security companies owned by EQT Partners and expand its overseas business by utilizing EQT Partners’ global network.

The industry was concerned that interest costs would increase due to the acquisition financing structure designed by EQT Partners to become the largest shareholder of SK Shielders. Furthermore, it is observed that this will lead to the burden of increasing SK Shielders’ dividend. It is for the same reason that Han Shin-pyeong analyzed that “the financial burden of  SK Shielders is still excessive.”

Previously, in the process of merging Life & Security Holdings in 2020, SK Shielders transferred acquisition finance worth 1.8 trillion won, resulting in a deterioration in financial indicators. Total borrowings of SK Shielders surged from KRW 3.7 billion in 2019 to KRW 2.429 trillion the following year on a consolidated basis. During the same period, the debt ratio rose from 63.2%메이저놀이터 to 803.4%, and the degree of dependence on debt rose from 2.3% to 65.8%. As of the first quarter of this year, SK Shielders’ debt ratio and debt dependence stood at 606.3% and 62%, respectively, showing no signs of recovery. 

EQT Partners raised about 2.3 trillion won in new acquisition financing to repay the existing acquisition financing, and used the funds to execute a paid-in capital increase of 2 trillion won in SK Shielders. SK Shielders saw the effect of improving its financial structure by repaying existing acquisition finance debts with the inflow of capital increase. 

However, in the process, the acquisition finance interest rate more than doubled from 3.2% to 7.4%. This is because the acquisition finance borrower changed from SK Shielders to KSH . According to the industry, interest expenses and dividends of about 80 billion won are estimated to rise to more than 150 billion won in the future. 

If SK Shielders borrows new acquisition financing as a borrower, it will have to bear interest costs of more than 100 billion won a year. As of the end of last year, SK Shielders’ net profit was 57.5 billion won. Free cash flow excluding facility investment costs from annual cash generation is negative (-) KRW 30.4 billion. You may incur a net loss as you bear the financial costs. Some say that EQT Partners chose  KSH as a borrower to avoid SK Shielders’ net loss despite rising interest rates. The problem is KSH ‘s low cash generating capacity. The Han Shinpyeong analyzed,  ” KSH is a paper company with limited cash generation ability” and “a dependent cash flow structure is expected to repay the principal and interest of the acquisition finance based on SK Shielders’ dividend.” Then, ” SK controlled through PEF

Shielders’ managerial rights are exposed to uncertainty in the investment recovery strategy in the mid- to long – term  . ” EBITDA (operating income before amortization and amortization ) on a consolidated basis was presented at KRW 500 billion. SK Shielders’ EBITDA for the first quarter of this year was KRW 101.5 billion.   “The financial uncertainty associated with the recovery of investment is not high due to the management policy of shareholders focusing on strengthening business capabilities,” he said. Requirements for upgrading the rating are △ business diversification through stabilization of new businesses and improvement of market position  . △ Profit-creation enhancement through improvement of service competitiveness was suggested. 

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