LG Chem secures funds for overseas expansionA group of financial institutions led by the Korea Development Bank (KDB), a state-run lender, will provide around $5 billion in loans to support LG Chem’s bid for investment in an overseas rechargeable battery plant.
“The financial institutions signed the agreement to offer the fund to be used for the construction of an overseas facility related to rechargeable batteries between 2020 and 2024,” a spokesperson at the KDB said, while declining to mention specific conditions of the loan.
Participating financiers include the Export-Import Bank of Korea and Nonghyup Bank.
The agreement was born out of the KDB’s new committee consisting of three state-run banks and other financial institutions in August at the height of trade tensions between Korea and Japan.
The initiative, overseen by the Financial Services Commission, was intended to bolster local parts and material businesses through favorable financial offerings, partnering with the three banks, the Industrial Bank of Korea and multinational investment banks like J.P. Morgan, Goldman Sachs, UBS and Credit Suisse as advisers.
The spokesperson also declined to mention which LG Chem facility would receive the funding, but industry insiders expect it to be spent on a U.S. factory.
LG Chem and General Motors will jointly invest up to $2.3 billion to establish an electric vehicle (EV) battery plant in Ohio, which will become LG’s first joint venture for EV batteries in the United States.
The two companies signed an agreement last week to establish a 50-50 joint venture for the project with an annual capacity of more than 30 gigawatt hours. Construction will start in mid-2020.
To facilitate financial liquidity of smaller parts suppliers for rechargeable batteries, LG Chem, the Korea Development Bank and the partnered financiers will create a 150-billion-won ($126-million) fund. The fund will be provided in the form of loans with lower interest rates, according to a statement released by the Financial Services Commission.
“We are thankful for the financial institutions as their move allowed for timely investment at a time when competition is heating up globally,” said Shin Hak-cheol, CEO of LG Chem.
BY PARK EUN-JEE [firstname.lastname@example.org]
with the Korea JoongAng Daily
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