Financial support from creditors has been finalized for the Seosan Plant integration project, "Daesan No. 1," of HD Hyundai Chemical and Lotte Chemical in South Chungcheong.
Korea Development Bank (KDB) on the 20th convened a voluntary council of creditors and resolved a financial support plan for the Daesan No. 1 project.
The creditors said the business restructuring plan for the Daesan No. 1 project aligns with the government's direction for restructuring the petrochemical industry. They also judged that, as relevant government ministries prepare a tailored support package across taxation, permits and approvals, cost structure improvements, regional economy and employment, and technology development support, the business restructuring plan can proceed without a hitch.
HD Hyundai Chemical and Lotte Chemical plan to integrate the Daesan business sites and shift to a high value-added and eco-friendly centered industry. During the restructuring period, Lotte Chemical will suspend operations of its aging naphtha cracking center (NCC), and the two companies will also scale down and operate their general-purpose downstream facilities. Lotte Chemical plans to partitioning the Daesan institutional sector and merge it with HD Hyundai Chemical.
With this resolution, HD Hyundai Chemical and Lotte Chemical will be able to receive more than 2 trillion won in financial support from the creditors. First, the creditors will provide 1 trillion won in new funds to these corporations. Of that, KDB will independently provide 500 billion won. KDB will additionally support 430 billion won for post-integration restructuring investments.
Existing liabilities totaling 1 trillion won will be converted into perpetual bonds. Because perpetual bonds are recognized as capital in accounting, they will have the effect of improving financial soundness. For three years after the integration, 7.9 trillion won in covenant debt will have repayments deferred, and existing financial terms, including interest rates, will be maintained.
HD Hyundai Oilbank, the holding company of HD Hyundai Chemical, and Lotte Chemical agreed to inject a total of 1.2 trillion won, 600 billion won each, through a paid-in capital increase.
Meanwhile, KDB will soon convene a voluntary consultation of creditors to also discuss financial support measures for Yeochun NCC. The creditors will prepare financial support plans necessary for the restructuring, such as maturity extensions and new funds, on the condition that current financial terms are maintained until the end of the restructuring.
A KDB official said, "Considering the impact of the recent situation in the Middle East, we will proceed with all procedures swiftly."