Lotte Chemical to Divest Majority Stake in Pakistani Subsidiary

Lotte Chemical will sell a 75.01% stake in its Pakistani subsidiary to a consortium of Asia Park Investment and Montage Oil DMCC. The deal, estimated to be worth more than 100 billion won, is part of Lotte Chemical's broad restructuring efforts to reduce its reliance on basic commodity production and expand its specialty business. The company's board is expected to approve the sale agenda at its February meeting.

Lotte Chemical's Pakistani subsidiary mainly produces purified terephthalic acid (PTA) with an annual production capacity of 500,000 tons. PTA is a key ingredient in making PET bottles, industrial yarns and textiles, but the global market for this commodity is highly competitive, and strong production capacity in countries such as China has put downward pressure on prices and profitability.

The decision to exit the Pakistani market reflects Lotte Chemical's ongoing efforts to streamline its business and focus on high-value-added specialty products. The divestment is part of Lotte Chemical's larger strategy to reduce the sales share of itsbasic chemicals division from 60% to 30% by 2030.

The company is also actively reducing borrowings through overseas asset securitization. In 2024, Lotte Chemical liquidated its Malaysian synthetic rubber subsidiary LUSR through a price return swap using 40% of the shares of its Louisiana subsidiary as collateral, earning 660 billion won in cash. In addition, the company plans to raise an additional 700 billion won using its shares in LCI in Indonesia.