On the 22nd, Lotte Chemical(011170) and Hanwha Solutions(009830) are rising together. The government's approval of the restructuring of the Yeosu petrochemical industrial complex is seen as boosting investor sentiment.
As of 10:00 a.m. that day on the Korea Exchange, Lotte Chemical is trading at 59,300 won, up 2,700 won (4.77%) from the previous session. At the same time, Hanwha Solutions is trading at 28,150 won, up 1,550 won (5.83%) from the previous session.
The Ministry of Trade, Industry and Resources said that day it had given final approval to the "Yeosu No. 1" petrochemical restructuring plan submitted by Yeochun NCC, Lotte Chemical, Hanwha Solutions and DL Chemical.
The restructuring plan calls for the additional shutdown of Yeochun NCC Plant 2 and the establishment of an integrated corporation by combining the remaining Plant 1 with Lotte Chemical's Yeosu plant. Through this, the companies plan to cut annual ethylene production capacity by about 1.4 million tons.
Equity in the integrated corporation will be held one-third each by Lotte Chemical, Hanwha Solutions and DL Chemical. Hanwha Solutions and DL Chemical plan to repay Yeochun NCC's liabilities through a paid-in capital increase totaling 545 billion won and invest 253.2 billion won in shifting to high value-added products and building infrastructure.
To ease the financial burden arising during the restructuring process, the government prepared a financial and tax support package exceeding 700 billion won. Through Korea Development Bank and others, it will provide up to 450 billion won in new funds and, taking into account the restructuring period, defer repayment of debts under the agreement until the end of 2029. Korea Trade Insurance Corporation will offer up to a 30% discount on import insurance premiums for companies undergoing restructuring and provide guarantees for importer financing totaling 200 billion won.