SK Group Bets on Negative-Revenue Plug Power

Posted on 02/27/2021


SK Group is the third largest conglomerate in South Korea. SK Group, through its unit Grove Energy Capital LLC, closed a US$ 1.6 billion investment and strategic partnership with Plug Power Inc. (ticker: PLUG), a provider of hydrogen fuel-cell and fueling solutions enabling e-mobility. SK Group owns approximately 9.6% of the issued and outstanding shares of Plug Power’s common stock immediately following the investment.

SK Group sees tremendous opportunity in the possible global transition to a hydrogen economy. There is a plan to form a joint venture company in Asia. he goal of the Asia JV is to establish a gigafactory in Korea by 2023 to produce fuel cells and electrolyzers. The companies previously announced entering into a definitive agreement in connection with the investment on January 6, 2021.

In January 2019, the South Korea government announced the Hydrogen Economy Roadmap through 2040, with ambitious goals, including: over 5 million tons of hydrogen per year, over 6 million fuel cell electric vehicles (EV), 1,200 refilling stations and 15 GW of fuel cell power generation, and expects the cumulative economic value of its hydrogen economy to reach around US$ 40 billion by 2040.

Advisors

Goodwin Procter LLP advised Plug Power. Simpson Thacher & Bartlett advised SK Group.

Plug Power reported a US$ 1.12 per share loss from negative US$ 316 million in sales for the fourth quarter of 2020. Plug Power had offered warrants of its stock to big customers like Amazon.com, Inc. and Walmart, Inc. in exchange for fuel cells they bought. The vesting of those warrants prompted the company to report negative revenue. Recently, Plug Power said its customer warrant program has new been fully expensed. Plug Power reported record gross billings in 2020 of US$ 337.4 million and US$ 96.3 million in the fourth quarter of 2020.

Keywords: SK Holdings, Co., Ltd., SK Group.

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