Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on October 31, 2019

KUALA LUMPUR: Eagle US 2 LLC has exercised its call option to buy an additional 34.79% stake in LACC LLC, a joint venture in which Lotte Chemical Titan Holding Bhd (LCT) holds an effective 35.2% stake.

The equity stake in LACC, which owns an ethane cracker plant in Louisiana, the US, was transacted at US$816.47 million (RM3.41 billion). The plant carries an annual capacity to produce one million tonnes of ethylene.

Before the share transaction, Lotte Chemical USA Corp (LC USA) held an 88% stake in LACC while Eagle US owned 12%.

According to an LCT filing with Bursa Malaysia, LC USA, in which LCT holds a 40% equity interest, has transferred at least 34.79% stake in LACC to Eagle US.

LCT’s parent Lotte Chemical Corp holds the remaining 60% stake in LC USA.

On completion of the transaction, Eagle US’ shareholding in LACC will be increased to 46.77% while LC USA is left with the remaining 53.23%.

In its filing, LCT said the call option also allows Eagle US to increase its equity interest in LACC to 50%.

Of the total proceeds, 25% will be used to pay off the syndicated term loan facility obtained by LC USA to fund the US Shale Gas Project and the remainder will be used by LC USA for new business plans in the US, such as the expansion of plants and the downstream business, according to the filing.

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

Apart from the ethane cracker plant co-owned with Eagle USA, LCT and Lotte Chemical Corp also operate a petrochemical facility with annual capacity of 700,0000 tonnes of mono-ethylene glycol in Lake Charles, Louisiana.

LCT shares closed three sen or 1.20% lower at RM2.48 yesterday, with some 754,300 shares traded, giving it a market capitalisation of RM5.64 billion. Year to date, the counter has eased 46.32% from RM4.62.

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