Lotte Chemical set to sell Pakistan unit for $156 million

KARACHI: Lotte Chemical Corporation (LCC), a South Korean chemical giant, inched closer to sell its subsidiary in Pakistan on Monday, with an announcement that the company had approved the sale of its entire shares to a local chemical company.

The Seoul-based company that was engaged in production of purified terephthalic acid (PTA) decided to sell the Pakistani unit for $156 million in a bid to streamline its business and secure more funds, a Korean news agency reported.

LCC possesses 75 percent stake in Lotte Chemical Pakistan Limited (LOTCHEM). It’s engaged in production of PTA that is widely used to make polyethylene terephthalate (PET) bottles and other polymer products, such as fibers, resins and thin films. The company has a capacity to produce over 500,000 tonnes of PTA annually through its plant located at Port Qasim, Karachi.

Lotte Chemical said the purpose of the disposal of shares was to optimise its business portfolio. “The Board of Directors of the Lotte Chemical Corporation, South Korea (LCC Korea), the majority (75.01%) shareholder of LOTTE Chemical Pakistan Limited, has approved and authorized the sale of all of the company’s shares held by LCC Korea (i.e., 75.01%) for the purpose of the optimisation of LCC Korea’s business portfolio,” a notice to the Pakistan Stock Exchange (PSX) read.

The consummation of the proposed divestment would be subject to the procurement of all applicable regulatory and corporate approvals as may be required, it added. Lucky Core Industries (LCI), previously ICI Pakistan Limited, will take over the entire 75.01 percent stake in LOTCHEM.

“We have received confirmation from Lotte Chemical Corporation that their board of directors has approved the sale of approximately 75.01% of the issues and paid up capital of Lotte Chemical Pakistan Limited, comprising approximately of 1,135,860,105 ordinary shares of the company,” LCI informed in a notice to the PSX.

Completion of the proposed transaction remains subject to the signing of the share purchase agreement and other transactional documents between the parties, along with receipt of necessary approvals, including the company’s board of directors, it added.

LCC would use the funds from the sale to bolster its advanced materials segment and make further inroads into sustainable chemical products, while upgrading the existing petrochemical products used as feedstock for plastics,the Korean news agency reported.

The sale of the Pakistani unit means that LCC will no longer engage in the PTA production. It shut down the domestic PTA production line in Ulsan, 307 kilometers southeast, in 2020. Lotte’s scrip at the bourse was traded at Rs28.2, up by Rs0.65 or 2.36 percent, with a turnover of 2.59 million shares on Monday.

Earlier, Novatex Limited had shown interest in buying the shares of LCC, but the deal couldn’t be finalised, a bourse notice read last week.