Lotte Chemical’s JV to transfer stake in US ethane cracker

PETALING JAYA: Lotte Chemical Titan Holding Bhd’s (LCT) joint venture company Lotte Chemical USA Corp (LC USA) is transferring at least 34.79% stake in LACC LLC to Eagle US 2 LLC for US$816.47 million (RM3.41 billion).

LCT told Bursa Malaysia that LC USA had entered into a securities purchase agreement with Eagle US 2 LLC for the transfer.

LCT and Lotte Chemical Corp own 40% and 60% in LC USA, respectively.

LACC is a joint venture for the development of the US ethane cracker plant with an 88:12 equity split between LC USA and Eagle US, respectively.

The stake transfer arose from Eagle US exercising its call option which allows the company to increase its equity interest in LACC to 50%.

Upon the completion of the transfer, Eagle US’ shareholding in LACC will increase to 46.77% with LC USA holding the remaining 53.23%.

Any additional equity interest Eagle US may receive is subject to finalisation of an audit and further negotiations between the parties concerning the purchase price.

LCT said 25% of the purchase price will be used to pay off the syndicated term loan facility obtained by LC USA to fund the US shale gas project, while the remainder will be used by LC USA for new business plans in the US such as the expansion of plants and downstream business.

LCT expects the transfer to generate a one-off gain on disposal that would have a material impact on the group’s financial statements.

“The transfer will reduce LC USA’s interest in LACC’s future financial performance and consequently, the group’s share of profit and loss in LC USA,” it said.