Shares of SK Corp., South Korea's biggest refiner, surged to a record high on Thursday as its plan to restructure into a holding company is expected to increase transparency in the
conglomerate.
Widespread anticipation of the move, announced on Wednesday, had helped send SK Corp. shares up 27.4% this year as of Wednesday's close, while expectations for improving refining margins had also helped.
The restructuring would come four years after Dubai-based fund Sovereign Asset Management tried to oust the oil refiner's fraud-convicted chairman Chey Tae Won in a high profile battle that ultimately failed.
SK Corp. will hold a conference call at 2 p.m. local time to discuss its restructuring plan.
Credit rating agencies Moody's and Fitch on Wednesday placed SK Corp. on watch for potential upgrades of the company's debt ratings, saying the move would help ease ownership complexity at the refiner as well as reduce exposure to loss-making units.
"SK's plan to restructure had a positive impact on its shares, which have been showing a bullish performance recently due to recovering refining margins," said Lee Hee Cheol, an analyst at CJ Investment and Securities. "The plan helped investor sentiment as it would increase SK's transparency. I expect shares to move up to the 110,000 won level," he added.
Other SK Group affiliates also rose, with SK Telecom and SK Networks both trading higher.
The refiner said on Wednesday it would split into two firms as it adopts a holding company structure in July to reorganize cross-shareholdings among the many SK Group affiliates.
SK Corp., valued at $12.8 billion at Wednesday's closing share price, will be divided into two firms, with the bigger one specializing in the energy business.
The smaller one would incorporate SK's life science business and other affiliates that focus on a wide range of businesses from chemicals to construction to telecoms.
Despite reforms brought in after the 1997-98 Asian financial crisis, some conglomerates are still run like family businesses, shifting money among group companies and using complex share ownership networks to control their businesses.
"The simplification of the ownership structure should create more transparency and remove the contagion risk from affiliates that are not directly linked to SK's value chain," said Mikyung Kwon, director in Fitch's Asia-Pacific energy and utilities team in a statement on Wednesday.
In 2003, SK Corp. chairman Chey Tae Won got a three-year jail term for a $1.2 billion accounting scandal and illegal stock dealings at subsidiary SK Global, now renamed as SK Networks, though the sentence was suspended in 2004.