Lotte Chemical has sold a 75.01% stake in its Pakistani subsidiary to a consortium comprising Asia Park Investment and Montage Oil DMCC. The deal, estimated to be worth over 100 billion won, is part of Lotte Chemical’s broader restructuring efforts aimed at reducing its reliance on basic commodity production and expanding its specialty business.
The company’s board approved the sale and sent notice to the Pakistan Stock Exchange Limited today (February 19, 2025). It stated that the Board of Directors of Lotte Chemical Corporation, South Korea (LCC Korea), the majority (75.1%) shareholder of Lotte Chemical Pakistan, has approved and authorized the sale of the company’s shares held by LCC Korea (i.e., 75.1%) as part of LCC Korea’s business portfolio transformation, subject to the execution of a share purchase agreement (Proposed Divestment) and on such terms and conditions as may be specified under the agreement.
Lotte Chemical’s Pakistani subsidiary, primarily engaged in the production of purified terephthalic acid (PTA), boasts an annual production capacity of 500,000 tons. PTA is a crucial component in manufacturing PET bottles, industrial yarn, and textiles. However, the global market for this commodity is highly competitive, with significant production capacity in countries like China exerting downward pressure on prices and profitability, according to Business Korea.
The decision to divest from the Pakistani market reflects Lotte Chemical’s ongoing efforts to streamline its operations and focus on high-value-added specialty products. The consortium includes Asia Park Investment, a Pakistani investment firm, and Montage Oil DMCC, a petrochemical company based in the United Arab Emirates.
This divestment is part of Lotte Chemical’s larger strategy to reduce the sales proportion of its basic chemicals division from 60% to 30% by 2030. The company is also actively reducing borrowings through overseas asset securitization. Last year, Lotte Chemical liquidated Lotte Ube Synthetic Rubber, a synthetic rubber manufacturing company in Malaysia, securing 660 billion won in cash through a price return swap using a 40% stake in its Louisiana subsidiary as collateral. Additionally, the company plans to raise an additional 700 billion won using its stake in LCI in Indonesia.
By divesting non-core assets and investing in technology and markets that promise higher returns, Lotte Chemical aims to enhance its profitability and market position in the global chemical industry, writes BK.
– ER/BK
