Lotte Chemical, HD Hyundai Chemical seek lifeline from creditors

(Lotte Chemical)

Lotte Chemical Corp. and HD Hyundai Chemical Co. have requested financial support from the state-run Korea Development Bank (KDB) as they plan consolidation of petrochemical facilities in Daesan, South Chungcheong Province.

According to financial industry sources on Wednesday, the combined financial liabilities held by Lotte Chemical and HD Hyundai Chemical amounted to 10.5 trillion won ($7.16 billion) as of the end of September. HD Hyundai Chemical had 5.6 trillion won and Lotte Chemical 4.9 trillion won.

KDB, the major creditor of both companies, alone holds more than 1 trillion won of their debt – about 900 billion won loaned to HD Hyundai Chemical and 500 billion won to Lotte Chemical – positing it as the key decision-maker on financial support.

In September, the financial sector signed an agreement to support restructuring in the petrochemical industry. The companies’ financial support applications were made under the framework of this agreement.

As a follow-up measure, KDB convened separate joint creditor councils for each company. For Lotte Chemical’s creditor group, a briefing session will be held on Friday.

Major creditors of Lotte Chemical include the Export-Import Bank of Korea, with 1.53 trillion won in exposure, and Shinhan Bank, with 1.17 trillion won. The meeting will review restructuring plans submitted by the two companies and outline the financial support.

A separate briefing for HD Hyundai Chemicals’ creditor group will also be scheduled soon. If the joint creditor council designates the companies as eligible for financial support, it will conduct a joint due diligence to assess the feasibility of the restructuring plans.

The council will also prepare self-rescue plans for both companies and their parent firms, along with financial support measures from creditor institutions.