South Korea's first voluntary restructuring deal in the petrochemical sector, the Daesan project in South Chungcheong Province, will launch its integrated corporate entity early next month.
Lotte Chemical (011170.KS) has recently carved out assets including a 1.1-million-ton naphtha cracking center (NCC) from its Daesan plant to form Lotte Daesan Petrochemical, which will merge with HD Hyundai Chemical starting in September to operate as an integrated entity, business sources said on the 9th. The merger of the combined HD Hyundai Chemical — in which HD Hyundai and Lotte Chemical will each hold a 50% stake — is scheduled to be registered on September 2.
Under the restructuring plan submitted to the government, the two companies plan to cut the combined HD Hyundai Chemical's NCC capacity to 850,000 tons from 1.95 million tons.
As part of shareholder self-rescue efforts, HD Hyundai Oilbank and Lotte Chemical will each inject 600 billion won into the newly established integrated entity, while the government will provide more than 2.1 trillion won in financial and tax support. Lotte Chemical is expected to improve its financial structure through the business realignment, as it will transfer about 1.6 trillion won ($1.15 billion) in debt to the new entity.
Meanwhile, Lotte Chemical posted a preliminary second-quarter operating profit of 110.1 billion won on a consolidated basis, swinging to a profit from an operating loss of 250.5 billion won a year earlier. It marks a second consecutive quarter in the black following the first quarter. Second-quarter revenue rose 39.2% from a year earlier to 5.69 trillion won.
Lotte Chemical plans to strengthen its specialty business centered on functional materials, building on its Yulchon compounding plant, which it aims to complete and bring into commercial operation within the year. The company will enhance its compounding materials production capacity and continue to expand the share of high-value-added products such as super engineering plastics.
