Negotiations with Private Lenders Held That Afternoon
Collateral Provided to Banks, Guarantees Obtained to Ensure Transaction Stability
"Lotte Group Will Take Direct Responsibility and Resolve the Issue"
On the 27th, Lotte Group announced that it will provide Lotte World Tower as collateral to banks to enhance the stability of Lotte Chemical's corporate bonds.
On the same day, Lotte Holdings stated in an official statement, "We have announced the convening of a bondholders' meeting this afternoon and decided to provide Lotte World Tower, a key asset of the group, as collateral to banks for credit enhancement purposes," adding, "This is to dispel market concerns and convey the message that there is no liquidity problem with Lotte Chemical to the market."
On the 21st, Lotte Holdings had announced that it would negotiate with bondholders to adjust the relevant covenants related to the loss of benefit of maturity due to non-compliance with financial covenants in the contract for the 2 trillion KRW public corporate bonds previously issued by Lotte Chemical.
Lotte Holdings emphasized, "This collateral provision is a substantial measure reflecting the group's strong determination to stabilize the market regarding the Lotte Chemical corporate bond issue," and added, "The group intends to take direct responsibility and resolve the recently surfaced crisis rumors."
Lotte aims to secure guarantees from commercial banks through the collateral provision to ensure stable trading of Lotte Chemical's corporate bonds. The covenant adjustment is expected to take place next month. Lotte Chemical explained, "The adjustment is being made because the current covenants do not sufficiently reflect the issuer's repayment ability as a profitability-related indicator."
Earlier, Lotte Group also stated that it has more assets than the amount of corporate bonds that lost the benefit of maturity this time, indicating sufficient liquidity. As of October, Lotte Chemical reportedly holds a total of 4 trillion KRW in available liquidity funds, including 2 trillion KRW in deposits. As of October, Lotte Group's total assets amount to 139 trillion KRW, and the value of its stock holdings reaches 37.5 trillion KRW. The total real estate value of the group is 56 trillion KRW based on October's evaluation, and immediately available deposits are also at the level of 15 trillion KRW.
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