[Edaily Marketin Reporter LEE GEON-EOM ] Lotte Corporation(004990), as the major shareholder, is lending its support to LOTTE CHEMICAL CORPORATION(011170)’s petrochemical restructuring and strengthening responsible management. Despite having no legal obligation to do so, the company passed a resolution to submit a “Letter of Commitment to Support Restructuring,” signaling its full support for the restructuring of the Daesan and Yeosu naphtha cracking plants (NCCs).

As the holding company has firmly signaled its intention to take a direct role in managing risks at its affiliates, the principle of responsible management is expected to become even more pronounced during LOTTE CHEMICAL CORPORATION’s future restructuring process.

According to a securities filing on the 26th and reporting by E-Daily, the Lotte Corporation board of directors approved a resolution late last month titled “Submission of a Letter of Commitment to Continue the LOTTE CHEMICAL CORPORATION Structural Innovation Support Agreement.” Specifically, the letter is reported to include commitments to continue providing financial and managerial support to LOTTE CHEMICAL CORPORATION, maintain its equity stake and management control, and cooperate in the implementation of LOTTE CHEMICAL CORPORATION’s self-rescue plan.

The submission of this letter of commitment is not a legally required procedure. It is being viewed as a demonstration of the company’s commitment to responsible management, as it represents a voluntary initiative taken by the major shareholder.

Given that a letter of commitment from the major shareholder or holding company typically follows the restructuring support process conducted through the creditors’ voluntary council, this measure can be viewed as an extension of that practice. Since providing financial and management support to subsidiaries is considered a core function of a holding company under the Holding Company Act, this letter of commitment is interpreted as an expression of the holding company’s commitment to effectively fulfill this role.

With the addition of this commitment from the major shareholder, observers predict that LOTTE CHEMICAL CORPORATION’s structural reform efforts will gain further momentum. Analysts note that, from the creditors’ perspective, the reaffirmation of the major shareholder’s willingness to provide support could have a positive impact on future financial assistance and review procedures. Some observers also assess that this move has further clarified Lotte Corporation’s commitment to responsible management, in which it shares the risks of its affiliates.

LOTTE CHEMICAL CORPORATION is also making progress in its industrial restructuring efforts. On the 20th, the Fair Trade Commission approved the business combination among LOTTE CHEMICAL CORPORATION, Lotte Daesan Petrochemical, HD HYUNDAI Oilbank, and HD HYUNDAI Chemical, subject to behavioral corrective measures. Reflecting concerns over oligopoly in the domestic market, the commission mandated that, for the next five years, the fluctuation rates of domestic sales prices for low-density polyethylene (LDPE) and ethylene vinyl acetate (EVA) be linked to export prices, and prohibited the sharing of competition-sensitive information.

LOTTE CHEMICAL CORPORATION was cited as the industry’s first best practice after submitting a business restructuring plan—involving the spin-off of its Daesan plant and its merger with HD HYUNDAI Chemical—one month ahead of the government’s submission deadline last November. At the Yeosu Industrial Complex, the company also submitted an additional plan to integrate and adjust overlapping facilities with HANWHA SOLUTIONS, DL Chemical, and Yeocheon NCC.

In terms of its portfolio, the company is also accelerating its shift toward specialty and eco-friendly products. The “Lotte Engineering Plastics” plant in the YulChon co., Ltd. Industrial Complex in South Jeolla Province began commercial production on some lines starting this October, and LOTTE ENERGY MATERIALS CORPORATION is increasing its supply of high-value-added circuit foil for artificial intelligence (AI).

The hydrogen fuel cell power plant operated by Lotte SK Enerroot in Ulsan has also been in commercial operation since June of this year. Since last year, the company has been strengthening its financial soundness by divesting non-core assets both domestically and internationally, securing approximately 1.7 trillion won in liquidity.

Upon completion in the second half of next year, it will become South Korea’s largest single compound production plant with an annual capacity of 500,000 metric tons, supplying high-performance materials to key industries such as mobility and IT. In the battery materials sector, its subsidiary, LOTTE ENERGY MATERIALS CORPORATION, is increasing the supply of high-value-added copper foil for AI through South Korea’s only copper foil production base.

In the energy sector, the company is accelerating the expansion of its hydrogen business. In Ulsan, through the joint venture Lotte SK Enerroot, commercial operation of the first 20-megawatt (MW) hydrogen fuel cell power plant began in June of this year. At the Daesan Industrial Complex, Lotte Air Liquide Enerhigh’s 450-bar high-pressure hydrogen distribution center also began operations last November.

The company is also working to ensure financial soundness. LOTTE CHEMICAL CORPORATION has secured approximately 1.7 trillion won in liquidity by divesting non-core assets both domestically and internationally. This included the utilization of stakes in LCLA (U.S.) and LCI (Indonesia), the liquidation of LUSR (Malaysia), the sale of LCPL (Pakistan) and the Daegu water treatment membrane business, and the disposal of its stake in Rezonnac (Japan).