US extends $2.5 billion loan to LGES-GM joint venture

By Park Jae-hyuk, The Korea Times - Ultium Cells, a joint venture between LG Energy Solution (LGES) and GM, has succeeded in attracting large-scale, long-term investment in the U.S., the Korean electric vehicle (EV) battery manufacturer said Tuesday.

The venture firm announced on Monday (local time) that it signed a contract to borrow up to $2.5 billion from the U.S. Department of Energy.

The interest rate for the loan was fixed at the 10-year U.S. Treasury yield level, which stood at around 3.6 percent as of last Friday.

Considering that the current interest rate of the AA-grade corporate bonds in the Korean won-denominated bond market is around 5 percent to 6 percent, Ultium Cells was able to borrow the money at an interest rate about 2 percentage points lower than what the company would expect from the domestic bond market.

"Large-scale investments are necessary for us to secure a stable production capacity in the North American battery market, which is expected to grow rapidly," an LGES official said. "Amid the recent interest rate hike and the looming economic recession, we overcame the difficulties in attracting investments by securing long-term policy funding at a lower interest rate, which will enable us to continue the differentiated growth in the U.S."

Ultium Cells plans to use the money to increase the production capacities of its factories located in the states of Ohio, Tennessee and Michigan.

Source: www.koreatimes.co.kr/www/tech/2022/12/129_341654.html 

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