Honam Petrochemical
and KP Chemical merged into a new company
January 11/2013
Honam Petrochemical and KP Chemical to merge
into Lotte Chemical Corporation
A major South Korean pertochemical and polymer producer, Honam Petrochemical,
and one of the largest South Korean PET and PTA producer, KP Chemical, has
decided to merge into a new company with a new name Lotte
Chemical Corporation, wrote Soo Young Huh, the President and CEO of Lotte
Chemical Corporation, in his letter to the company's business partners.
After undergoing a sizable growth, Honam Petrochemical Corp and Kp Chemical
Corporation took one step further through a merger between the two companies,
which was effective as of December 27, 2012.
The name of the new company will be LOTTE CHEMICAL Corporation. The newly formed
company believes that this move will strengthen its position both in domestic
and international markets and is in a line with Lotte Chemical's strategy to
become a leading global company.
Honam Petrochemical Corporation is a South Korean producer of petrochemicals and
polymers with its businesses comprising of polyethylene (PE), high density
polyethylene (HDPE), polypropylene (PP), mono ethylene glycol (MEG), ethylene,
propylene, benzene, compound polypropylene, and other petrochemical products,
providing plastics, synthetics and basic chemicals. It holds the largest shares
in HDPE, polyethylene and MEG in the Korean market. The company also supplies
its production to the Russian market. As per MRC DataScope, in January-November,
2012, the import volumes of polymers by Honam Petrochemical to Russia amounted
to about 36,000 tonnes, out of which PE makes 25,346 tonnes, PP - 5,326 tonnes,
PET - 5120 tonnes. It is worth noting that in 2011 the company did not deliver
its material to the Russian market.
KP Chemical Corporation is one of the largest South Korean polymer companies,
which annually produces 740,000 tonnes of paraxylene, 955,000 tonnes of PTA and
446,000tons of PET by using the vertically combined production system
established in the Ulsan Plant Complexes 1 and 2. More than 90% of the company's
products are exported throughout the world. The major markets pioneered through
the company's robust sales network are China, Russia and Europe. According to
MRC DataScope, the import volumes of KP Chemical to Russia declined almost twice
in January-November, 2012, and amounted to 31,400 tonness, while during the same
period of 2011, this index made about 61,000 tonness. Despite the sharp decline
in sales in Russia, KP Chemical continues to occupy the leading position among
foreign producers in the Russian PET market.
Lotte Chemical Investing $2.6B In Two Joint
Ventures
Korea-based Lotte Chemical Corp. has announced two joint ventures worth $2.9
billion that will help produce fabrics for Japan’s Mitsubishi.
The first venture is for an ethane cracker plant. Its site hasn’t been finalized
but it is anticipated to be near Lake Charles, La.
Lotte will hold 90 percent of the plant and Axiall will
hold 10 percent. The companies anticipate that the plant will produce
a million tons of ethylene a year.
Georgia Gulf は2013年1月にPPG
Industriesのcommodity chemical divisionと合併し、Axiall Corp.となった。
Ethylene from the plant will then be used to
make 700,000 tons of ethylene glycol, an ingredient
used in polyester fibers for Mitsubishi. The
ethylene glycol will be processed in a plant adjacent to the cracker that
Lotte will hold a 70 percent stake in, with Mitsubishi holding the rest.
According to regulatory filings seen by
Reuters the project will also be run as a joint venture, this time
with Japan’s Mitsubishi Corporation.
The plans still need approval from the
companies’ boards of directors.
Lotte Chemical owns three crackers in Asia that produce more than 2.8 million
metric tons of ethylene annually.
“We are pleased to affirm our partnership with Axiall to develop a world-scale
ethane cracker fed by U.S. shale gas,” said Soo Young Huh, Lotte Chemical CEO.
“This investment will build on Lotte Chemical’s global ethylene construction and
operating capabilities and increase our manufacturing presence in the North
American market.”
ーーー
Business Korea
Lotte Chemical Corp. plans to set up a shale
gas-based ethane cracker plant in the U.S. It is a large overseas chemical plant
business with investment approaching 3 trillion won (US$2.72 billion).
Lotte Chemical and Axiall Corp. of the U.S. have finalized their joint venture
arrangements to construct the ethane cracker plant in Louisiana on June 17
(local time). The project will produce ethylene, a basic petrochemical raw
material derived from existing crude oil using shale gas-based ethane gas
instead of naphtha.
Previously, the two companies had signed a basic contract for a joint venture in
Feb. last year. With the final contract this time, they changed the amount of
ownership and project details. At the time of the basic contract, Lotte Chemical
and Axiall held a 50-50 ownership agreement. However, it was decided that Lotte
Chemical will invest 90 percent while Axiall invests 10 percent in the plant.
With the change of ownership percentages, Lotte Chemical and Axiall will take
900,000 tons and 100,000 tons of ethylene, respectively,
from an annual production capacity of 1 million tons of ethylene. Lotte Chemical
agreed to sell 400,000 tons to Axiall, securing a
stable source of demand.
Lotte Chemical will use the remaining 500,000 tons of ethylene to make
ethylene glycol (EG) as planned earlier. The
company is currently considering cooperating with Mitsubishi of Japan in a bid
to stable its EG business, which was supposed to be run by itself. If so, Lotte
will hold a 70 percent stake in the business, with Mitsubishi holding the rest.
EG is often used in making synthetic fibers and automotive engine antifreeze
fluid.
Combining the ethane cracker plant and EG business, the investment for the
project is estimated at 2.9 trillion won (US$2.63 billion). However, both
companies will decide the final investment in the second half of this year when
the plan for engineering, procurement, and construction (EPC) becomes clear.
They plan to begin commercial production at the end of 2018. Through the joint
project, Lotte Chemical expects to generate US$1.5 billion (1.65 trillion won)
in revenue every year from 2019.
Since the production cost of ethylene produced in an ethane cracker plant is a
third of that produced in a naphtha cracker plant, petrochemical companies
scramble to invest in the sector in order to reduce costs and diversify raw
materials.
Once the joint venture with Axiall starts commercial production, the annual
ethylene production capacity of Lotte Chemical will increase from the current
2.8 million tons to 3.7 million tons.
An official from Lotte Chemical said, “The project will reduce dependence on
naphtha and increase the use of low-priced gas together with the
Surgil chemical complex project in Uzbekistan,
which will be completed in the second half of this year. It will play a crucial
role in strengthening its global competitiveness through diversifying raw
materials, production bases and sales areas.”
Ustyurt GCC(gas-chemical complex）at
Surgil field will process 4.5 bcm of gas and annually from gas-condensate
Surgil, East Berdakh and North Berdakh fields and other fields respectively.
The processed products shall include 400 thousand tons of high-density
polyethylene (HDPE), 100 thousand tons of polypropylene, sales gas, py-gas
and py-oil. In addition, the Ustyurt GCC shall sell excess electricity
generated in excess of its needs.
June 21, 2012
KBR announced today that it will provide an integrated technology,
engineering, procurement and construction support solution for Uz-Kor Gas
Chemical’s flexible feed, 400,000 metric ton per year ethylene plant in the
Ustyurt region of Uzbekistan. The plant will be the first ethylene plant
based on KBR’s license in Uzbekistan and will utilize KBR’s proprietary
SCORE™ (Selective Cracking and Optimum Recovery) technology.
June 7, 2016 WSJ 6/10
撤回
Lotte Chemical Steps Into Battle for Axiall
South Korean group is offering more than $2.6 billion for U.S. company
A top South Korean conglomerate has lobbed an unsolicited bid of more than
$2.6 billion into an already messy U.S. proxy
battle, becoming the latest Asian company to make waves in its hunt for overseas
assets.
The offer from Lotte Chemical Corp. , disclosed in a regulatory filing Tuesday
morning in Seoul, injects Lotte into a battle for control of Atlanta-based
Axiall Corp. Earlier this year, the U.S. chemicals company rejected two
unsolicited bids from Houston-based Westlake Chemical
Corp. as “opportunistic and inadequate.”
Westlake has launched a proxy fight, and is
urging shareholders to approve its slate of candidates to
replace the board of Axiall at Axiall’s annual shareholders meeting on
June 17.
Lotte Chemical has teamed up with Axiall in the past on investment projects in
the U.S., and it might be hoping its offer will get a friendlier greeting than
Westlake’s. Axiall and Westlake spokesmen couldn’t immediately be reached for
comment Tuesday after Lotte disclosed its bid.
Asian companies are taking up more bidding
wars for overseas targets, highlighting their rising confidence as they seek
growth abroad. This year’s 17 such unsolicited takeovers—either pending or
completed—is the highest number at this point since 2008, and the $54.9 billion
deal value is a record, according to Dealogic.
Lotte’s bid is among the largest, but the bulk of these uninvited Asian offers
come from ambitious Chinese companies such as Anbang Insurance Group Co., whose
failed $14 billion bid for Starwood Hotels & Resorts Worldwide Inc. attracted
global attention in March.
Unsolicited bids are relatively uncommon in the world of big acquisitions; most
pursuers opt instead to negotiate in private with a company’s management before
placing a public offer. These Asian bids also stand out for their size: In many
instances this year, they have represented a big premium to their foreign
rivals’.
Lotte Chemical’s bid is a relatively modest one by that measure. And in general,
South Korean companies haven’t often shown as much appetite as Chinese companies
for entering U.S. takeover battles uninvited.
When they have, they haven’t always gotten results. The largest of these offers—
Samsung Electronics Co. ’s $5.85 billion bid for U.S.-based SanDisk Corp. in
2008—was withdrawn after several rebuffs.
The size of Lotte Chemical’s bid wasn’t disclosed in the regulatory filing, and
a spokeswoman for the Lotte Group said only that it was more than three trillion
won ($2.6 billion). Axiall’s market capitalization was $1.6 billion, based on
Monday’s closing price in New York. Its shares were up 9.4% at $25.49 on Tuesday
morning.
If successful, a deal would further consolidate the chemicals sector, following
the merger of DuPont Co. and Dow Chemical Co. , announced in December, and
ChemChina’s $43 billion acquisition of Swiss seed and pesticide company Syngenta
AG , expected to close this year.
Westlake’s initial bid came in January, after a bruising 2015 for Axiall, when
falling sales and profit sent its share price tumbling 64%. After being snubbed,
Westlake sweetened its offer to $3.1 billion, including the assumption of $1.5
billion in debt.
Lotte Chemical’s bid comes at a delicate time for South Korea’s fifth-largest
conglomerate, whose interests are as diverse as chemicals and chewing gum. Last
year it went through a boardroom coup in which Shin Dong-bin, second son of
Lotte’s nonagenarian founder, ousted the heir apparent, his older brother. Last
month, Mr. Shin filed for an initial public offering of the conglomerate’s
centerpiece, Hotel Lotte Co., that would be South Korea’s largest IPO to date if
the shares price at the top end of the indicated range.
But last week, South Korean authorities raided the offices of Hotel Lotte’s
lucrative duty-free shopping business, the source of most of its revenue and
profit. The authorities also raided the home of Shin Young-ja, a sister of Mr.
Shin and a top group executive.
South Korean media reports said prosecutors are looking into whether a local
cosmetics company paid bribes in exchange for floor space at Lotte’s duty-free
retail outlets.
Hotel Lotte confirmed that the raids occurred, but declined to comment further
about the matter. Ms. Shin couldn’t be reached for comment. The Seoul Central
District Prosecutors’ office declined to confirm any details of the probe.
Hotel Lotte, which delayed the investor roadshow for its IPO because of the
investigation, said in a filing Tuesday that it would postpone its listing by
several weeks and lower the range at which it plans to sell its shares to
investors—though the high end of the new range would still put it in record
territory.
Lotte Chemical shares fell 3.5% on Tuesday in Seoul after its bid was disclosed,
to 260,500 won ($223.95), the lowest level since January.
November 23rd, 2017
Lotte Versalis Elastomers: a new industrial
complex in South Korea
A new integrated industrial complex for the production of elastomers was
launched today in Yeosu, South Korea. The launch was attended by the local
authorities, the Ambassador of Italy to Korea and major customers.
The new plants of Lotte Versalis Elastomers, a
50:50 joint venture between Versalis (Eni), a
global leader in the elastomers business, and Lotte Chemical, a major
petrochemical company headquartered in South Korea, have been built in a record
time of 26 months and in conformity with sustainability principles, thanks to
the use of the most advanced European technological standards. This important
achievement is part of Eni's strategy to transform its chemical business also
through international development.
The joint venture, established in 2013 with the aim of targeting growth in the
Asian elastomers market, uses Versalis' technology, industrial expertise and
commercial network, as well as Lotte Chemical's site integration, which ensures
the availability of feedstocks and industrial facilities.
The industrial complex has a nameplate capacity of 200
kton/year of elastomers (EPDM,
Ethylene-Propylene Diene Monomer; s-SBR,
solution-Styrene Butadiene; BR, Butadiene Rubber).
The production streams are targeted to premium application segments, mainly tyre
and automotive industries, styrenics modification and technical goods.
'The construction of the first industrial complex in Asia is an important
milestone in Versalis' international development strategy, which leverages
valuable proprietary technologies. It also strengthens our leading position in
the global elastomers market and other prospects for growth. We are excited to
be working on this project with an established partner such as Lotte Chemical.
By joining forces, both Versalis and Lotte Chemical are benefitting from
important synergies.' says Versalis' CEO, Daniele Ferrari.
Versalis is present in the Asia-Pacific region through its commercial units in
Shanghai, Qingdao, Mumbai and Singapore.
Great to welcome Chairman Shin from
Lotte Group to the WH. They just
invested $3.1 BILLION into
Louisiana-biggest investment in U.S.
EVER from a South Korean company, &
thousands more jobs for Americans.
Great partners like ROK know the
U.S. economy is running stronger
than ever!
South Korean business
conglomerate Lotte Group
has signed a deal to
acquire a controlling
stake in Iljin
Materials, a copper foil
supplier to electric
vehicle battery makers
for
2.7 trillion won ($1.9
billion), in
Lotte's move to enhance
the EV component
portfolio, filings
showed Tuesday.
Lotte Battery
Materials USA,
a subsidiary of
Lotte's
petrochemical
arm Lotte
Chemical, will
buy
a 53.3 percent
stake, or
24.6 million
ordinary shares,
in the world's
fourth-largest
copper foil
manufacturer
from Chief
Executive
Officer Huh Jae-myung
and two other
shareholders.
The deal will
give Lotte
Chemical the
rights to
exercise stock
warrants
to buy an
additional 5
million shares.
According
to the filing
with the
Financial
Supervisory
Service, the
deal is expected
to close by
February 2023.
Lotte Chemical
said in the
filing that the
acquisition is
meant to
expand its
battery material
business.
It has earlier
pledged to
invest 4
trillion won in
the field of
secondary
battery
materials by
2030. Most
recently, Lotte
Chemical's US
arm in July
announced a plan
to build a
battery material
plant in
Kentucky by 2025
that could
manufacture
36,000 metric
tons of aluminum
foil.
Iljin Materials
logged a 46.8
billion won
operating profit
in the first
half of this
year, up 33.5
percent from the
previous year.
It holds a 13
percent of
market share in
the world by
sales of copper
foils for EV
batteries,
followed by
Korea-based SK
Nexilis and
Chinese rivals
Watson and Chang
Chun, according
to SNE Research.
Iljin Materials
has supplied the
battery material
to Korean
lithium-ion
battery makers
LG Energy
Solution and
Samsung SDI.
It boasts some
60,000 tons of
copper foil
production
capacity
annually, with
manufacturing
plants in
Malaysia and
Korea. The
company plans to
add 230,000 tons
of capacity by
2027.
Korean petrochemicals firms are downsizing their businesses as they are
grappling with lower demand and higher supply of products from China,
according to industry sources Thursday.
Lotte Chemical, South Korea’s leading petrochemicals company, has reportedly
embarked on the process of selling its Malaysian unit
Lotte Chemical Titan Holdings.
In addition, its domestic rival
LG Chem is said to be in talks
with Kuwait Petroleum Corp. to sell a stake in its
naphtha cracking center in Yeosu, South Jeolla Province.
Lotte Chemical is currently tapping both local and foreign companies, as
well as global private equity firms to sell its share in Lotte Chemical
Titan, the company’s manufacturing facility in Malaysia, according to local
reports. Lotte Chemical is expected to sell its 74.7 percent in the
Malaysian arm, a leading petrochemicals firm in Southeast Asia worth some
$566 million based on its market capitalization.
In 2010, Lotte Chemical acquired full ownership of LC Titan from Malaysia’s
Chao Group for around 1.5 trillion won ($1.13 billion). In 2017, the company
went public in the Malaysian market at a value of some 4 trillion won.
Until the late 2010s, LC Titan posted 300 billion-500 billion won in annual
sales. But after years of sluggish sales, the company posted a 61.2 billion
won of operating loss in 2023. The market capitalization of the Malaysian
arm also plunged to some 744 billion won as of Thursday.
Sources say Korean petrochemicals firms are struggling to compete with
Chinese rivals that are expanding extensively in Southeast Asia to make up
for losses at home.
To avoid increasing competition in the sector, LG Chem has been also
reportedly trying to spin off its second naphtha cracking center plant in
Yeosu and sell its stake in the plant. The company hopes to sell a 49
percent stake in the second such plant to the Kuwait energy firm while
maintaining the remaining 51 percent stake, local reports said.
Both companies, Lotte Chemical and LG Chem, however, said that nothing has
been confirmed yet, dismissing the speculations at least for the moment.
The shift away from basic petrochemicals seems inevitable for the nation's
top chemical firms, according to an official from a local petrochemicals
firm.
“It is now very difficult to win price competition with Chinese companies
when it comes to basic chemical products,” the official said. "Local
petrochemical firms will have to shift to next-generation materials to
survive in the industry."
A growing number of
Korean petrochemical companies are halting
investments and considering selling their
unprofitable facilities to cope with the
lingering industry downturn resulting mainly
from the oversupply of Chinese products,
according to industry officials, Tuesday.
LG Chem is
reportedly negotiating with Kuwait Petroleum
Corp. to split off its second naphtha cracking
center in Yeosu, South Jeolla Province, and sell
part of its stake in the facility to the Middle
Eastern country’s state-owned company.
This came after the
Korean firm failed last year to find an eligible
buyer of the factory who could afford at least 3
trillion won ($2.3 billion).
“We are considering
various options to enhance the competitiveness
and value of our petrochemical business, but
nothing has been decided yet,” the chemical unit
of LG Group said in its regulatory filing.
Lotte Chemical is
said to be trying to sell Lotte Chemical Titan,
its manufacturing plant in Malaysia, which
produces ethylene, polyethylene and
polypropylene.
Petrochemical
companies here and overseas, as well as major
private equity firms, are mentioned as potential
buyers of the Malaysian stock market-listed
company, which is evaluated at 740 billion won.
In 2010, Lotte Chemical acquired the factory
from Malaysian firms for 1.5 trillion won.
Given that the
Korean firm failed twice in its attempts to sell
its Pakistani subsidiary, however, it remains
uncertain whether it will succeed in selling the
Malaysian subsidiary.
“We are considering
various strategies regarding Lotte Chemical
Titan, but nothing has been decided yet,” the
chemical unit of Lotte Group said in its
regulatory filing.
Hyosung TNC, the
world’s leading spandex maker, recently scrapped
its plan to produce butanediol, one of the key
materials for spandex, citing the rapid increase
in the supply of Chinese products.
Kumho Petrochemical
confirmed it will unload its entire stake in one
of the two remaining Chinese joint ventures,
although the company cited environmental
regulations as the reason, instead of its
profitability. The company is also rumored to be
selling its stake in the other joint venture,
although it denied the rumor.
In 2021, the Korean
firm sold its 50 percent stake in Nanjing Kumho
GPRO Chemical to its Chinese partner, Jiangsu
GPRO Group, to focus on more lucrative
businesses.
Before the COVID-19
pandemic, China was the largest importer of
Korean petrochemical products. The world’s
second-largest economy’s reopening was therefore
expected to allow LG Chem, Lotte Chemical and
various other petrochemical firms here to enjoy
a rebound in their profits.
However, Chinese
companies have enhanced their production
capacities over the past few years, becoming the
main competitors of Korean firms in the markets
for ethylene and propylene. In addition,
weakening demand for petrochemical products amid
the global economic slowdown has curbed an
increase in their prices.
Securities analysts
remained skeptical about a recovery in the
petrochemical sector in the near future.
“Producers of
rechargeable battery materials or downstream
products, such as synthetic resins, will be the
only survivors in the petrochemical market,” NH
Investment & Securities analyst Choi Young-kwang
said.
Sung Dong-won, a
researcher at the Export-Import Bank of Korea’s
Overseas Economic Research Institute, also
advised Korean petrochemical firms to diversify
their buyers and seek a transition to high
value-added and eco-friendly products.
2024.11.29
Lotte to Slash Chemical Investments by 90%,
Sell Assets, Exit Unprofitable Duty-free Shops
Lotte Group held an investor
relations conference for institutional investors on Nov. 28 at the Korea
Teachers’ Credit Union building in Yeouido, Seoul, to present financial
restructuring plans for its key affiliates, including Lotte Chemical, Hotel
Lotte, Lotte Engineering&Construction, and Lotte Shopping.
Lotte Chemical
announced plans to reduce its investment size, which exceeded 6 trillion won
(approximately $4.3 billion) last year, to one-tenth
of that amount by 2026. A company representative stated, “Investments
of 6.3 trillion won last year and 2.5 trillion won this year will be scaled
down to 1.3 trillion won next year and between 500 billion and 600 billion
won by 2026. We aim to achieve financial stability by 2026 through
optimizing working capital without additional borrowing.”
The company also plans to
reduce its reliance on basic chemicals and
enhance asset efficiency by divesting low-performing assets. Regarding
concerns over event of default (EOD) risks related to corporate bonds, Lotte
Chemical clarified, “Corporate bonds subject to these covenants total 2
trillion won. We plan to convert them into guaranteed bonds by securing bank
guarantees by mid-January next year.”
The corporate bonds in question are tied
to conditions requiring the maintenance of specific financial ratios until
principal and interest payments are fully repaid. These include maintaining
an average EBITDA at least five times the annual interest expense over three
years and a consolidated debt-to-equity ratio not exceeding 200 percent.
Hotel Lotte recently signaled changes for
its underperforming duty-free division. It announced plans to review the
closure of some unprofitable overseas duty-free shops. Currently, Lotte
operates three downtown duty-free shops and ten airport duty-free shops in
Japan, Vietnam, Australia, and other locations.
A Hotel Lotte representative explained,
“While the hotel and world business divisions are showing strong
performance, the recovery in the duty-free business remains sluggish. Our
goal is to achieve stable profits by optimizing store operations, reducing
fixed costs, and restructuring sales strategies.”
The representative further emphasized,
“Among our total assets of 18 trillion won, more than 12 trillion won
consists of real estate and stock value. Additionally, we hold over 1
trillion won in liquidassets, including 700 billion won in deposits and an
unused credit line of 430 billion won.”
Lotte E&C announced plans to reduce its
debt by over 1 trillion won by the end of this year to lower its
debt-to-equity ratio. It also confirmed plans to repay guaranteed corporate
bonds issued by Lotte Chemical by the first half of next year and emphasized
it would no longer rely on support from affiliates in the future.
Lotte Shopping is set to conduct a
revaluation of its assets for the first time in 15 years. During the last
revaluation in 2009, the company’s asset portfolio grew from 3.1 trillion
won to 6.7 trillion won, reducing its debt-to-equity ratio from 102 percent
to 87 percent. A Lotte Shopping representative explained, “Of the 1.3
trillion won in debt maturing in 2025, including 900 billion won in
corporate bonds, liquidity remains stable with unused bank credit lines and
cash reserves. The sale of the Centum City department store in Busan is
unrelated to liquidity issues and is a separate transaction.”
