South Korean base oil refiner SK Corp.s board of directors has approved a proposal to split SK into a holding company, expected to be named SK Holdings, and an operating company, tentatively named SK Energy-chemical, with each company listed separately on the Korea Stock Exchange. The company announced the plan April 11.
K.S. Ryu, senior manager for SKs base oil business team, told Lube Report, even though SK will change the company structure to a holding company structure, this will not have any impact on the base oil business at all. The base oil business will fall under the new SK Energy-chemical. Ryu said the SK Energy-chemical name is a temporary, tentative name, and SK will announce a new operating company name later on.
Once we are reorganized, the holding company will become an investment company and under independent management, operating subsidiaries will concentrate solely on their core business fields, said Shin Heon-Cheol, SK Corp.s president and chief executive officer. This is a proactive response to the constructive suggestions made by a majority of the shareholders to separate the non-business related investment assets from the core business unit, via a holding company structure. It is also in line with governments policy, which has been promoting a holding company structure for Korean companies. In March, SKs newly assembled board of directors began examining the matter in depth.
SK plans to reorganize seven major affiliate companies under the new holding company to eliminate the current structure of cross-share holdings, a move it believes will reinforce its credit rating. The affiliates include SK Energy-chemical (tentative name), SK Telecom, SK Networks, SK E&S, SKC, SK Shipping and K-power. Once the reorganization is complete, operating company SK Energy-chemical will focus on its energy, chemical, exploration and production businesses.