Lotte Suwon Station Shopping Refinances 220 Billion PF... Partial Support from Lotte Capital

[Asia Economy Reporter Lim Jeong-su] Lotte Suwon Station Shopping Town, a subsidiary of Lotte Shopping, has refinanced project financing (PF) worth 220 billion KRW. Some financial institutions that previously provided credit guarantees for the existing PF loan withdrew, and it is known that part of the refinancing funds were borrowed from Lotte Capital, an affiliated financial company.

According to the investment banking (IB) industry on the 31st, Lotte Suwon Station Shopping Town recently borrowed 195 billion KRW in PF refinancing funds from a special purpose company (SPC). The maturity of the PF loan is three years, and the interest rate has not been disclosed. The SPC issued securitized bonds based on the principal and interest to be received from Lotte Suwon Station Shopping Town as underlying assets to raise the loan funds.

In this process, Lotte Shopping provided a capital replenishment agreement to the SPC. This is a commitment to lend funds to the SPC if the SPC has difficulty repaying the securitized bonds to investors. The refinancing was successful as Lotte Shopping, with its strong credit rating, provided credit enhancement.

Additionally, banks such as Shinhan Bank, Woori Bank, and NongHyup Bank provided purchase commitments for the securitized bonds to the SPC. This means that if existing investors withdraw and new investors do not appear during the securitized bond refinancing process, these banks will purchase the unsold securitized bonds on behalf of the SPC.

Lotte Suwon Station Shopping Town is a Lotte Group affiliate that constructs and operates a complex shopping mall near Suwon Station at 134 Sehwa-ro, Gwonseon-gu, Suwon-si, Gyeonggi-do. Lotte Shopping holds 100% of the shares.

Lotte Shopping purchased the rights to use the land near Suwon Station for 20 years and built the shopping mall. When the lease period expires, the land use period can be extended for an additional 10 years. Currently, Lotte Shopping and Lotte Asset Development are leasing and using the building.

Lotte Suwon Station Shopping Town plans to use the procured funds to repay the PF loans borrowed for constructing the Suwon Station complex shopping mall. The existing PF loan was worth 220 billion KRW, and it is known that refinancing was completed by borrowing 195 billion KRW this time plus 25 billion KRW from Lotte Capital.

It is understood that some financial institutions that previously provided credit guarantees for the past PF loan withdrew during the refinancing. Previously, Shinhan Bank, Woori Bank, IBK Industrial Bank, NongHyup Bank, Suhyup Bank, and Daegu Bank provided credit guarantees, but this time only Shinhan Bank, Woori Bank, and NongHyup Bank participated.

An IB industry official said, "As some financial institutions withdrew, it is understood that the shortfall was borrowed from Lotte Capital."

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