Lotte Chemical to divest interest in Indonesian arm;

Malaysia’s Lotte Chemical Titan Holding Bhd (LCT) is to divest 49% of its equity interest in PT Lotte Chemical Indonesia (LCI) to its major shareholder, Lotte Chemical Corporation, Korea (LCC), which is also the parent company, for US$65.4 million cash. Public-listed LCT will still hold a 51% stake in the Indonesian unit after the share sale.

The rationales for the proposed divestment are the challenging petrochemical business environment and financial performance as well to allow LCC to jointly fund the company’s integrated petrochemical facility, said LCT in a statement.

The Lotte Chemical Indonesia New Ethylene (LINE) project consists of 1 million-tonne/year naphtha cracker and other related downstream petrochemical facilities located in Cilegon, Indonesia.

LCT President/CEO Dr Lee Dong Woo said the strategic expansion will steer the company in achieving its vision to become a top-tier petrochemical company in Southeast Asia by 2024.

“With LCC’s participation, the amount of debt needed by LCT to fund the LINE project is significantly reduced, and LCT will be able to share with LCC the risks associated with the LINE project. This will also enable the company to pursue further growth opportunities in key markets and support ongoing operations and continue to declare dividend payments going forward,” he said.