Lotte Chemical will spin off the Daesan plant business unit through partitioning to establish "Lotte Chemical Daesan Petrochemical (tentative name) Co., Ltd." As part of the government-approved "No. 1 petrochemical industry restructuring" project, this is a step to integrate it with HD Hyundai Chemical (hereafter Hyundai Chemical) going forward.
Lotte Chemical stated accordingly on the 26th through a disclosure titled "Report on key matters (company partitioning decision)." The partitioning date is June 1, and the new entity will be set up as an unlisted company.
Lotte Chemical said, "After this partitioning, we plan to pursue a merger between the newly established company and HD Hyundai Chemical Co., Ltd.," adding, "Through this, we will strengthen vertical integration from raw material procurement to final product production and seek to enhance operational efficiency by building an integrated production system."
The new entity will be absorbed and merged into Hyundai Chemical, and in return Lotte Chemical will receive newly issued shares of Hyundai Chemical.
Ultimately, Lotte Chemical and HD Hyundai Oilbank will each hold 50% of the equity of the surviving merged entity (Hyundai Chemical) on an equal basis. The two companies will also each make a capital contribution of 600 billion won to the integrated entity.
The related restructuring envisions signing a merger agreement in June and completing the merger in September.
Meanwhile, to expedite implementation of the Daesan No. 1 project, the government decided to provide a financial and tax package totaling 2.1 trillion won, including new funding support and perpetual bond conversions.