Lotte Chemical Titan offers to buy back retail shares

PETALING JAYA: Lotte Chemical Titan Holding Bhd is offering to buy back all shares alloted to retail and non-cornerstone bumiputra investors during its book building exercise, in an unprecedented move which could lead the stock becoming a pure institutional play.

The group said in a filing with Bursa Malaysia Securities that the move is to allow investors to reconsider their investment decision, following the cuts made to its intial public offering (IPO).

Lotte Chemical closed its book building exercise on Monday night, pricing its IPO share price for both institutional and retail investors at RM6.50, instead of RM8. Retail investors will be refunded the difference of RM1.50.

This was after it announced on Monday a decision to cut its IPO share offering by a fifth due to weak demand.

In one of three filings with Bursa Malaysia, Lotte Chemical offered to buy back up to 59.2 million IPO shares representing a 2.57% of the enlarged share capital of Lotte Chemical, which would cost it RM384.8 million at RM6.50 a piece.

Eligible investors will be despatched a request form for the share buy back, which is to be filled and returned to Malaysian Issuing House Sdn Bhd by July 18.

In the off-chance that the offer is fully taken up, Lotte Chemical’s market capitalisation will fall to RM14.62 billion. Bursa Malaysia Securities has vide a letter dated July 3 approved certain waivers needed to proceed with the buy back, which again if fully taken up, would reduce the public shareholding spread of the group to below 25%.

Under listing requirements, an entity is not permitted to purchase its own shares should the move result in a breach of public shareholding spread requirements.

Lotte Chemical said it will seek the approval of its current sole shareholder, Lotte Chemical Corp, for the buy back offer prior to the date of listing.

Meanwhile in a separate filing, Lotte Chemical said its much reduced proceeds from the exercise will not affect its ability to fund the development and construction of the integrated petrochemical facility.

Prior to the share buy back announcement, Lotte Chemical said the IPO would only raise RM3.77 billion for the group, compared to the initial RM5.92 billion. The outcome of the share buy back however could lower the proceeds further.

About 21.27 million IPO shares under the retail offering were not subscribed and clawed back and reallocated to the institutional offering.