April 18, 2017 11:46 pm JST

Lotte to list Malaysian unit for expansion drive

Proceeds tagged for $3.5bn Indonesian plant

CK TAN, Nikkei staff writer

Lotte Chemical hopes to raise over $1 billion floating its Malaysian subsidiary to boost polyolefin production in Indonesia.

SINGAPORE -- Lotte Chemical, a unit of South Korea's family-owned conglomerate Lotte, is expanding its footprint in Southeast Asia by floating its Malaysian subsidiary in an effort to raise over $1 billion.

In a draft prospectus to Securities Commission Malaysia, the subsidiary, Lotte Chemical Titan Holding (LCT), said there will be 740.5 million shares, or 30% of the enlarged issued share capital, in the initial public offering (IPO).

LCT said the listing will enhance its position as one of the biggest producers of polyolefins -- the feedstock for plastic products -- in Southeast Asia. LCT operates 11 plants, most in the southern state of Johor and three in Merak, Indonesia.

The proceeds from the IPO will be used to enlarge manufacturing capacity, including a new integrated petrochemical plant in Indonesia costing $3.5 billion.

Established in 1991, LCT's manufacturing facilities accounted for over 50% of polyolefin production in Indonesia and Malaysia in 2016. It is the fourth largest producer of polyolefin products in Southeast Asia, exporting to over 60 countries.

LCT's net profit was up 114% year on year to 1.31 billion ringgit ($297 million) in 2016 on revenue of 8.13 billion ringgit because of reduced crude oil prices.

In a filing to the Korean Stock Exchange early this month, Lotte Chemical said it plans to list LCT in the third quarter of this year.

Maybank Investment Bank is the principle adviser on the IPO, and joint bookrunners include Credit Suisse, J.P. Morgan, and CIMB Investment Bank.

Asia300

Lotte Chemical Corp.

South Korea

Market(Ticker): KRX(011170)
Sector:
Industry:
Process Industries
Chemicals: Specialty
Market cap(USD): 11,802M
Shares: 34.27M

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