Lotte E&C repays $402 mn to Lotte Chemical ahead of schedule

Lotte E&C repays $402 mn to Lotte Chemical ahead of schedule [Sources : Lotte E&C, Lotte Chemical]

Lotte Engineering & Construction Co. (Lotte E&C) has repaid a loan of 500 billion won ($402 million) borrowed from its largest shareholder Lotte Chemical Corp. more than 10 days ahead of schedule to suggest improved liquidity conditions.

Lotte E&C announced Friday that it has paid back 500 billion won in loans to Lotte Chemical well before due date, brushing off concerns that Lotte Chemical’s planned acquisition of Iljin Materials Co. may be derailed due to funding restraints across Lotte Group. Lotte Chemical has to pay 2.7 trillion won to complete the takeover of the domestic battery material maker by the end of next month.

The improvement in financial conditions comes after Lotte Group on Friday agreed to partner with Meritz Securities Co. to create a 1.5 trillion won joint operation fund to support Lotte E&C.

Major affiliates of Lotte Group, such as Lotte Property & Development Co., Hotel Lotte Co., and Lotte Fine Chemical Corp. will be responsible for about 600 billion won of the fund while the remaining 900 billion won will be pitched by Meritz Securities, Meritz Fire & Marine Insurance Co. and Meritz Capital Co.

The fund will be used to repay 1.2 trillion won in real estate project financing-backed securities maturing in the first quarter ending March.

Lotte E&C has borrowed a total of 900 billion won from its affiliates since October last year - 500 billion won from Lotte Chemical, 300 billion won from Lotte Fine Chemical, and 100 billion won from Lotte Homeshopping Co. The company has already paid back loans to Lotte Homeshopping and Lotte Fine Chemical in November and December.