Lotte Chemical, parent to jointly fund RM18b plant in Indonesia
Published on 02 Oct 2019. | Source: thestar.com.my
KUALA LUMPUR: Lotte Chemical Titan Holding Bhd (LCT) has secured the green light from shareholders for the proposed divestment of its 49 per cent equity interest in Lotte Chemical Indonesia (LCI), a wholly-owned unit of LCT, to its major shareholder Lotte Chemical Corporation (LCC) for RM3.6 billion.
Following the divestment, both LCT and LCC would jointly fund the integrated petrochemical facility known as the LCI new ethylene project for RM18 billion in Cilegon, Indonesia, president and chief executive officer Dr Lee Dong Woo said.
"We felt that the best way to fund the project is via the help from our parent company so with this divestment they are bringing in RM3.6 billion to jointly participate with us in the project as a 49 per cent shareholder, we already have RM2.8 billion from our initial public offering exercise.
"Therefore we are looking at borrowing about 60 per cent or RM11 billion to fund the project. About RM7 billion will be coming from our internal funds -- RM2.8 billion secured from the initial public offering exercise, RM3.6 billion coming from the parent company -- so we are only short of RM900 million," he told reporters after the company's extraordinary general meeting here today.
Lee said the project is expected to boost the company's production capacity by around 80 per cent to over six million metric tonnes from the current 3.5 million metric tonnes.
The new integrated complex and other related downstream petrochemical facilities will provide a better product mix and improve overall operational efficiency.
LCT, according to him, expects to start construction in the later part of 2020 and hopes to complete the project by 2023.
Lee noted that the project would be an attractive business proposition due to Indonesia's dependency on petrochemical imports.
The country is also expected to remain a large net importer of polyolefins, with the domestic plastics demand gap expected to further widen following the rising population and healthy consumption growth.
"It is also important to note that the global petrochemical industry growth is in tandem with global gross domestic product growth and the Southeast Asia region is one the fastest growing economic regions in the world, further underlining the great potential for the project and the company," he explained.
Lee also noted that despite the prevailing business environment mainly due to the US-China trade war, the company is maintaining an optimistic outlook and seeks to expand its business during this challenging time and to be able to ride on the cycle uptrend upon the completion of the project.
"We believe this project will be the key growth driver for our business moving forward and it is a perfect fit to realise our vision to become a top-tier petrochemical company in Southeast Asia by 2024," he added. - Bernama
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