Moody's keeps SK on review

Moody's Investors Service kept SK Corp. and the guaranteed debt of Momenta (Cayman) at Ba2 on review for downgrade.

The review began on March 12 after the revelation of accounting fraud at SK Global Co. and the consequent deterioration in its financial position.

Moody's said it remains concerned that creditor banks of SK Global may seek SK group companies, including SK Corp., to provide material financial support for SK Global.

SK Corp. maintains substantial bank facilities to support its crude purchases and Moody's also remains concerned that the potential for banks to withhold credit lines to SK Corp. will constrain the company's ability to manage its ongoing working capital requirements.

In addition, the accounting irregularities at SK Global, and more recently SK Shipping Co., raise concerns about the quality of the financial disclosure at SK Corp.

However, Moody's noted SK Corp. has recently received an unqualified report form its auditors (Ahn Kwon & Co which is affiliated with Deloitte Touche Tohmatsu) regarding its 2002 financial statements.

Moody's recognises that SK Corp currently maintains substantial cash balance of around KRW1.4 trillion, which could be utilized to support the company's liquidity needs. In addition, Moody's expects SK Corp. to post materially improved operating cash flow in 2003 as the company benefits from the improving refining margins in recent months.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.