이 기사는 2021년 12월 02일 08:05 thebell 에 표출된 기사입니다.

LG Magna e-Powertrain, a joint venture between LG Electronics and Magna International, is gearing up to raise funds as it has obtained a short-term credit rating.

The company has recently received a short-term rating of A2 from several credit rating agencies, the second highest among short-term rating levels. Its lack of profitability was taken into consideration despite expectations for strong financial performance.

In July, LG Electronics had completed the split-off of part of its electric vehicle parts operations. The new entity LG Magna e-Powertrain is 51% owned by LG Electronics and 49% owned by Magna International.

LG Magna e-Powertrain’s cumulative revenue stood at about 400 billion won ($338 million) as of the end of the third quarter, with order backlog worth 10 trillion won as of the end of 2020. Despite high expectations for revenue growth, the company needs to secure funds for investment before it could achieve a turnaround. Credit rating agencies estimate the company will need approximately 170 billion won a year in the mid to long-term for research and development and capital expenditure.

LG Magna e-Powertrain had total borrowings of 51.2 billion won with cash reserves of 110.1 billion won as of the end of September, which puts the company in a 59 billion won net cash position. Its debt ratio stood at 29.8%. The company is tapping into the short-term financial market as it can't raise funds on its own in a situation where it is still in the red.

Given the move by LG Magna e-Powertrain, some industry observers say LG Electronics may have no intention of providing financial support for a while. “A joint venture is not an easy structure to increase capital as that would result in changes in the shareholdings unless all shareholders participate in the capital increase,” said an industry source.

LG Electronics’ partner Magna International injected 521.3 billion won to acquire 49% of LG Magna e-Powertrain, which had flown into LG Electronics.

“It is difficult to confirm LG Magna e-Powertrain's possible plan for a capital increase,” an official at LG Electronics said. (Reporting by Choong-hee Won)