Lotte Group is using its crown jewel – the iconic Lotte World Tower – as collateral to shore up its troubled chemical unit following a debt covenant breach.
The South Korean conglomerate pledged the 123-story skyscraper, valued at 6 trillion won ($4.3 billion), to support Lotte Chemical’s corporate bonds after the subsidiary triggered an event of default by failing to maintain required financial ratios.
The chemical maker breached terms requiring it to keep its EBITDA at least five times annual interest expense and maintain a debt-to-equity ratio below 200%. The default gives creditors the right to demand immediate repayment.
The move to stake Seoul’s tallest building comes as Lotte Chemical grapples with deteriorating market conditions. While company officials say the unit has 4 trillion won in liquidity, including 2 trillion won in deposits, the default has raised concerns about broader financial stability at the group.
A Lotte representative said the collateral pledge demonstrates the parent’s commitment to addressing market concerns. The broader Lotte Group reports total assets of 139 trillion won and readily available deposits of 15.4 trillion won.
The company is now in talks with bondholders to renegotiate covenant terms through its Lotte Capital unit.
