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Lotte Chemical office building. (Photo=Lotte Chemical) |
[Alpha Biz= Reporter Kim Sangjin] Lotte Chemical is reportedly undergoing a major restructuring of its overseas businesses due to significant financial difficulties.
The company is considering the sale of its petrochemical complex in Banten, Indonesia, known as the "Line Project," which is currently under construction.
The project, which involves an investment of approximately 4.5 trillion KRW, has faced challenges as the Korea Development Bank (KDB) has expressed reluctance to extend additional loans or support.
Due to Lotte Chemical’s ongoing losses and rising debt, concerns have arisen regarding Lotte Group's debt guarantees, prompting KDB to demand rigorous restructuring measures, including the potential sale of the Indonesian facility.
According to information gathered by Alpha Biz, KDB has stopped providing additional financial support and has outlined preliminary guidelines for debt recovery, which include the sale of the Indonesian petrochemical complex.
An insider familiar with Lotte Chemical’s situation noted, “The construction of the Indonesian petrochemical complex, scheduled for completion next year, is facing difficulties. Approximately 5 trillion KRW is needed, but with inadequate support from KDB and other sources, the company is exploring various options, including a sale.”
Lotte Chemical, in partnership with Lotte Chemical Titan, is building a 3.9 billion USD (about 4.5 trillion KRW) petrochemical complex in Banten, Indonesia, set to be completed next year.
Additional funding is required for the project's successful completion, but securing it has proven challenging. The global petrochemical industry has faced difficulties in recent years, and Lotte Chemical is struggling with liquidity issues.
Yoon Joo-ho, CEO of Umbrella Research, commented, “We want to sell the Malaysian Titan petrochemical company, but the market value has significantly dropped compared to the purchase price, and no buyers are coming forward. Although Chairman Shin Dong-bin’s business strategy was correct at the time, the rapid deterioration of market conditions has created challenges.”
A Lotte Chemical spokesperson told Alpha Biz, “The line project is over 95% complete, and additional funding is not required. We have not heard of KDB sending any messages about the sale of our Indonesian NCC.”
The spokesperson added, “However, management efficiency for overseas operations in China and Malaysia is already underway.”
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
