이 기사는 2021년 10월 26일 08시06분 thebell에 표출된 기사입니다

South Korea’s Lotte Chemical, which has pursued conservative financial policies, is poised to change its strategy as it decides to inject nearly 1 trillion won ($855 million) into the group’s hydrogen business.

Lotte Chemical’s Indonesian subsidiary, Lotte Chemical Indonesia, will issue new shares worth 1.4 trillion won, of which Lotte Chemical and Lotte Chemical Titan Holding Berhad (LC Titan) will take up 702.2 billion won and 730.9 billion won respectively, according to the company’s regulatory filing on Friday.

LC Titan is 75.86% owned by Lotte Chemical. Lotte Chemical and LC Titan’s investment in Lotte Chemical Indonesia will amount to 1.8 trillion won including the latest investment.

The proceeds will be used to fund a massive petrochemical complex project, dubbed as Lotte Chemical Indonesia New Ethylene (LINE) project. The project is aimed to build a petrochemical complex there that produces source materials for various petrochemical products, including ethylene and polyethylene. Lotte Chemical said it is not considering an additional investment to fund the 4.4 trillion won project.

“The Indonesian project is worth $3.9 billion,” said an official at Lotte Chemical. “The Indonesian subsidiary itself will finance the amount that falls short through borrowings.“

The latest move marks a sharp contrast to Lotte Chemical’s number one management principle, zero debt. Lotte Chemical has focused on maximizing assets that could be securitized at any time to respond appropriately to unexpected circumstances.

Lotte Chemical’s debt-to-equity ratio stood at only 36% on a non-consolidated basis as of the end of June. The net debt ratio was only 0.4%, which means it practically had no borrowing in its total cash reserves. Its subsidiary LC Titan also had debt-to-equity ratio of 14.6% on a consolidated basis as of the end of June.

The Indonesian subsidiary will leverage by itself instead of attracting funds from its deep-pocketed parent mainly because Lotte Chemical will put to a huge amount of money into its hydrogen business.

Lotte Chemical has announced its plan to invest 2 trillion won by 2025 and additional 2.2 trillion won by 2030 in the hydrogen business in a bid to cut its carbon emissions and foster the new growth driver.

Lotte Chemical has recently decided to invest 100 million euros into the Clean H2 Infrastructure Fund, which is a 1.5 billion euro global hydrogen investment fund jointly created by Air Liquide and TotalEnergies. (Reporting by Ki-soo Park)