Lotte E&C again stretches out to sibling, family rescue hits $751 mn in a month

Lotte Engineering & Construction (Lotte E&C) on Thursday borrowed 100 billion won ($74 million) from its home shopping sibling, stretching emergency funding from the family of South Korea’s fifth largest conglomerate over the last month to 1.1 trillion won as it struggles to cover the project financing dues amid icy demand in the debt market.

Lotte E&C in a regulatory filing said Thursday that it has borrowed 100 billion won from Woori Home Shopping, a home shopping unit under Lotte Group with an obligation of repayment on Feb. 9, 2023, at an interest rate of 7.65 percent.

Lotte E&C has been relying on rescue from the Lotte family members since last month as it has found it impossible to raise new debts for refinancing in the local market, remaining jittery after a default declaration by a local government-backed project financing of Legoland Korea.

According to the Korea Investors Service, Lotte E&C has a total of 3.1 trillion won of asset-backed securities maturing by the end of this year. Its contingent liability, meaning a liability or a potential loss that may occur in the future, related to property development financing exceeded 6 trillion won as of October.

Previously on Oct. 18, Lotte E&C announced it was selling new shares worth 200 billion won to its largest shareholder Lotte Chemical and other Lotte Group affiliates. The company on Oct. 20 disclosed a plan to borrow 500 billion won from Lotte Chemical and 300 billion won from Lotte Fine Chemical.

It has come to rely on the family as the corporate market is yet to recover from the panic triggered by the Legoland financing default. The government and central bank have been running aid programs while top-rated public enterprises and banks are refraining from new issues to recuperate the market.