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Lotte Chemical headquarters, Seoul (Photo courtesy of Lotte Chemical) |
[Alpha Biz= Kim Jisun] SEOUL, November 12, 2025 — Lotte Chemical Corp. has completed a ₩663.7 billion (US$490 million) refinancing of its Price Return Swap (PRS) facility, selecting Korea Investment & Securities as its new lead manager, replacing Meritz Securities, according to investment banking sources on Wednesday.
Korea Investment & Securities directly underwrote the entire PRS issuance through its short-term note (commercial paper) account, marking one of the firm’s largest self-funded transactions ahead of its Integrated Investment Account (IMA) business approval expected next year.
The refinancing replaces a previous PRS deal signed with Meritz Securities in 2023, which was backed by a 40% equity stake in Lotte Chemical Louisiana (LCLA) — the company’s U.S. subsidiary. The earlier contract carried an interest rate in the mid-5% range with annual interest costs of about ₩33.2 billion, and included a clause requiring Lotte Chemical to repurchase the asset-backed commercial paper (ABCP) if unsold in the market — effectively transferring credit risk back to the issuer.
Under the new agreement, that onerous repurchase clause has been removed, and the effective maturity extended to over four years, creating a more stable financing structure.
Analysts view the deal as part of Korea Investment & Securities’ balance-sheet expansion strategy, utilizing its ₩18 trillion in short-term notes and equity capital to capture higher returns from direct principal investments.
Despite the refinancing, Lotte Chemical continues to face liquidity and profitability pressures. The company has reported seven consecutive quarters of operating losses and was downgraded in June, amid a prolonged downturn in the global petrochemical cycle driven by Chinese overcapacity. With limited access to the bond market, the firm has increasingly relied on short-term commercial paper for funding.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
