Lotte Chemical Titan rises 6% on Indonesian unit stake sale

-A +A

KUALA LUMPUR (Aug 13): Shares in Lotte Chemical Titan Holdings Bhd (LCT) rose as much 6.46% this morning after it announced that it is trimming its equity stake in subsidiary PT Lotte Chemical Indonesia (LCI).

At 11am, LCT pared gains to trade at RM2.72, up 9 sen or 3.42%, with 772,800 shares changing hands. Its market capitalisation stood at RM5.978 billion.

Last Friday, LCT said it is selling a 49% stake in LCI to its parent Lotte Chemical Corp (LCC) for US$65.4 million (RM273.49 million) cash.

After the share sale, Bursa-listed LCT will still hold a 51% stake in the Indonesian unit.

LCT said the divestment is proposed given the challenging petrochemical business environment and financial performance, which are causing continuous margin compression of LCT's profits as well as a decrease in cash flows from operations.

Subsequent to the proposed divestment, the company said LCC will participate directly in LCI's Integrated Petrochemical Facility (IPF) project together with LCT based on their respective proportionate shareholdings.

Of the total cash proceeds of RM273.49 million, the bulk of RM251.49 million (91.96%) will be utilised to fund the IPF project, while the remaining RM22 million will be used for estimated expenses.

See also: Lotte Chemical Titan to sell 49% stake in Indonesian unit to parent company as it affects earnings