Lotte Chemical Titan's subsidiary plans to transfer 34.79 pct stake in Eagle 2 LCC for US$816.47 mil
KUALA LUMPUR: Lotte Chemical Titan Holding Bhd’s 40 per cent owned subsidiary, Lotte Chemical USA Corp (LC USA) has entered into a securities purchase agreement with Eagle US 2 LLC (Eagle US) for US$816.47 million (RM3.41 billion) to transfer about 34.79 per cent of the latter stake in LACC LLC (LACC).
LC USA is a 40:60 joint venture company between the Lotte Chemical Titan and Lotte Chemical Corp, responsible for undertaking the LC USA Shale Gas Project in the United States.
In an exchange filing today, Lotte Chemical Titan said any additional stake Eagle US may receive is subject to finalisation of an audit and further negotiations between the parties concerning the purchase price.
“The Transfer is arising from Eagle US exercising its call option which allows Eagle US to increase its equity interest in LACC to 50 per cent (call option),” it said.
LACC is a joint venture between LC USA and Eagle US for the development of the US Ethane Cracker Plant in which LC USA owns 88 per cent stake and Eagle US, an entity within Westlake Chemical Corp, owns the remaining 12 per cent stake.
“Upon completion of the transfer, Eagle US’ shareholding in LACC will be increased to 46.77 per cent with LC USA holding the remaining shareholding of 53.23 per cent,” it added.
The company said 25 per cent 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 and the remainder will be used by LC USA for new business plans in the USA such as the expansion of plants and downstream business.
“The transfer is expected to generate a one off gain on disposal that would have a material impact on the group’s financial statements.”
However, the computation of the gain on disposal is subject to the finalisation of the financial audit on LACC to determine the final purchase price, the final percentage of dilution and any tax liability arising thereon.
“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.”
By NST Business - October 30, 2019 @ 7:48pm