LOTTE Chemical, HD Hyundai Oilbank, and HD Hyundai Chemical said on the 26th they jointly applied to the Ministry of Trade, Industry and Energy for a review to approve a business reorganization plan to implement measures to strengthen competitiveness in the petrochemical industry and to participate in restructuring the domestic petrochemical sector. HD Hyundai Chemical is a joint venture in which HD Hyundai Oilbank and LOTTE Chemical hold 60% and 40% equity, respectively.
For the reorganization, LOTTE Chemical will spin off as a physical division its plant within the Daesan petrochemical industrial complex in South Chungcheong and merge the spun-off company into HD Hyundai Chemical. After the merger, the newly established entity created by the physical spin-off will be dissolved, leaving only HD Hyundai Chemical. Afterward, LOTTE Chemical and HD Hyundai Oilbank plan to each hold 50% equity in HD Hyundai Chemical.
LOTTE Chemical and HD Hyundai Chemical put forward this plan after the Ministry of Trade, Industry and Energy and the petrochemical sector held a voluntary industry agreement ceremony in August for a relaunch of the petrochemical industry and decided to reduce annual naphtha cracking center (NCC) capacity by 2.7 million to 3.7 million tons (t). At the time, the petrochemical industry said it would submit voluntary reorganization plans by the end of this year.
LOTTE Chemical and HD Hyundai Chemical are the first in the petrochemical industry to present a reorganization plan. Going forward, HD Hyundai Chemical, which will include LOTTE Chemical's Daesan plant, will discuss NCC operation plans held by LOTTE Chemical and HD Hyundai Chemical and finalize the reduction scale for NCC.
LOTTE Chemical said, "The plan is subject to review and approval procedures, and we will make additional disclosures under relevant regulations as soon as key matters are finalized," adding, "For detailed operations, we plan to prepare an optimal plan through further consultations between the two companies after approval of the business reorganization." The company added, "We also plan to proceed with a transition to a high value-added and eco-friendly business structure in parallel and contribute to enhancing the competitiveness of the petrochemical industry."
HD Hyundai, the parent company of HD Hyundai Oilbank, said in a filing, "After the merger, operating the petrochemical product production function within the Daesan industrial complex under a single system is expected to strengthen the overall effectiveness of the reorganization as consistency in production and processes and operational safety improve," adding, "Through this portfolio reorganization, we plan to enhance the stability of the business structure and focus on core businesses to strengthen the mid- to long-term business foundation."