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Lotte Chemical to sell Pakistani subsidiary amid persistent liquidity crisis rumors

Published: 17 Feb. 2025, 17:02 Updated: 17 Feb. 2025, 19:06

KIM JU-YEON
[email protected]

Former Lotte Chemical CEO and President Lee Hun-ki, center, and firm employees examine the construction site of a petrochemical complex in Indonesia on April 23, 2024. [YONHAP]

Lotte Chemical is in the early stages of selling its Pakistani unit as part of the firm’s and Lotte Group’s wider efforts to improve liquidity. The conglomerate has shut down or sold multiple businesses in the past year — including its digital health care and car rental subsidiaries — amid rumors of a groupwide liquidity crisis stemming from its ailing chemical and retail arms.

Pakistan-based investment firm AsiaPak Investments and Middle Eastern oil and gas company Montage Oil sent nonbinding letters of intent to acquire Lotte Chemical’s 75.01 percent stake in Lotte Chemical Pakistan (LCPL), a Lotte Chemical spokesperson confirmed to the Korea JoongAng Daily on Monday.

The notice of the offer was filed with the Pakistan Stock Exchange on Thursday, Reuters reported the same day.

The acquisition price will be disclosed in an electronic disclosure at a later date, Lotte Chemical’s spokesperson said. Yonhap News reported the price to be in the 100 billion won ($70 million) range.

LCPL primarily produces purified terephthalic acid, commonly used in polyester fibers or plastic. The firm recorded 109.2 billion rupees ($1.3 billion) in revenue and 3.8 billion rupees in operating profit last year.

Lotte Chemical acquired LCPL in 2009 and put it up for sale, citing a “mismatch with its vision for a high value-added profit channel.”

The chemicals firm has been liquidizing its overseas unit assets to reduce its debt; the firm had 1,579 billion won in liabilities and 10,405 billion won in borrowings as of last year’s fourth quarter.

The company has also put up its stake in its Indonesian entity for sale for a reported 700 billion won.

It’s not just Lotte Chemical the conglomerate has been slimming down on.

The group announced its intent to liquidize Lotte Healthcare, its digital health care subsidiary, in December. The funds from the sale would be used in other health care businesses such as its senior residences operated by Lotte Hotel.

Lotte Hotel and Lotte Hotel Busan sold its 56.2 percent stake in Lotte Rental, the group’s rental car subsidiary, to Affinity Equity Partners for 1.6 trillion won in December of last year. The proceeds will help revitalize Lotte Hotel, which operates the group’s duty-free business and has been struggling in recent years as the sector falters.

Food and beverage arm Lotte Wellfood, meanwhile, sold its Jeungpyeong factory to Shilla Bakery in February.

BY KIM JU-YEON [[email protected]]