LG Chem, Desperate Attempt 'Financing with Overseas Exchangeable Bonds'...Deteriorating Petrochemical Industry Conditions
LG Chem, Desperate Attempt 'Financing with Overseas Exchangeable Bonds'...Deteriorating Petrochemical Industry Conditions
  • BK Min
  • 승인 2023.06.23 17:51
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LG Chem took out an LG Energy Solution equity card to secure cash flow. The attitude, which had been pessimistic about the stake sale until the beginning of this year, suddenly changed in five months.

According to the investment banking (IB) industry, LG Chem will soon issue overseas exchangeable bonds to raise operating funds. Convertible bonds give the investor the right to exchange the bonds held by the issuer for shares of another company controlled by the issuer after a certain period. The organizers were Goldman Sachs, Citi Global Market Securities, and HSBC.

The exchange target is LG Energy Solutions stocks owned by LG Chem. As of March this year, LG Chem owns 81.84% of LG Energy Solutions.

The issuance scale is about 2 trillion KRW, accounting for 1.5% of the total issued stocks of LG Energy Solutions. The exchange value is determined by adding a premium based on the closing price of LG Energy Solutions the day before. Exchangeable bonds will be listed on foreign stock exchanges.

As the news that LG Chem would sell a minority stake in LG Energy Solutions was announced, the stock price of LG Energy Solutions fell 5% from the previous day on the 19th.

Although the sale size is only 2% of the total market capitalization, it is analyzed that the market reacted sensitively due to concerns that the largest shareholder sold its stake and that block deals (bulk trading after hours) could pour into the market.

It is a decision to preemptively secure live ammunition necessary for investment in the three primary (battery materials, eco-friendly, innovative new drugs) new growth engines. The prolonged slump in petrochemicals, which has been playing the role of a cash cow, is also pointed out as a reason for the change in position.

Until the beginning of this year, LG Chem drew a line in selling its stake in LG Energy Solutions. In the performance announcement and conference call held in January, he said, "The amount of facility investment (CAPEX) this year is expected to be 4 trillion KRW"

The position has changed after 5 months because it is necessary to preemptively secure funds for massive investment in the three new growth engines.

Recent investments have focused on battery materials. Last year, it announced that it would invest $3 billion in constructing the largest cathode material plant in the US (120,000 tons). This year, it planned to build a precursor factory in Saemangeum in partnership with Chinese company Huayu Cobalt. The total investment amount is 1.2 trillion won. It is also considering creating a cathode material production facility with an annual capacity of 60,000 tons in Europe.

The prolonged sluggishness of the petrochemical business, which served as a cash cow, is also cited as a reason. LG Chem's petrochemical business suffered a loss of 166 billion KRW in the fourth quarter of last year due to the global economic recession and sluggish demand. In the first quarter of this year, it recorded a loss of 51 billion KRW. This contrasts the operating profit of 635 billion KRW in the first quarter of last year. It will likely turn to the black in the second quarter of this year. Still, the general opinion is that it will take more work to secure the same performance as in previous years due to the continued oversupply.

An official from LG Chem explained, "We are reviewing various ways to raise funds to invest in the three new growth engines"

 By_BK Min, KDFN kdf@kdfnews.com

The summary of this article is as follows

■LG화학 "LG에너지솔루션 지분 매각 추진, 구체적으로 결정된 바 없어"

LG화학이 LG에너지솔루션 지분 매각 추진설에 대해 결정된 바가 없다고 밝혔다.

LG화학은 21일 LG에너지솔루션 지분 매각 추진 관련 보도에 대한 한국거래소 조회공시 요구에 "LG에너지솔루션 지분 매각 추진 보도 관련하여, 당사는 3대 신성장 동력 투자를 위해 다양한 자금 조달 방안을 검토 중에 있으나 아직 구체적으로 결정된 바 없다"고 공시했다.

이어 "향후 본건과 관련해 구체적으로 결정되는 사항이 있을 경우 또는 1개월 이내에 재공시하도록 하겠다"고 덧붙였다.

앞서 한국경제는 LG화학이 자회사 LG에너지솔루션 주식을 활용해 약 2조원 규모의 교환사채(EB) 발행을 추진한다고 이날 오후 보도했다.

업계에 따르면 LG화학의 이같은 결정은 3대(전지 소재·친환경·혁신 신약) 신성장 동력 투자에 필요한 자금을 확보하고 석유화학 업황의 악재가 배경인 것으로 보고 있다. 

김상록 기자 kdf@kdfnews.com


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