Lotte Construction "No Issues in Managing PF Contingent Liabilities... Holding Over 2 Trillion Won in Cash Assets"
Lotte Construction announced on the 4th that there are no issues in managing contingent liabilities related to real estate project financing (PF).
In a press release, Lotte Construction stated, "Of the 3.2 trillion KRW in unstarted PFs maturing in the first quarter, 2.4 trillion KRW will be extended to a long-term financing structure through the formation of funds by financial institutions including commercial banks within this month, until the conversion to the main PF."
They added, "The remaining 800 billion KRW is also expected to resolve contingent liabilities through conversion to the main PF within the first quarter."
After Taeyoung Construction's workout (corporate restructuring) application, Lotte Construction was mentioned as a major company facing a PF crisis due to contingent liabilities in the construction industry. On the same day, a report from the securities industry suggested that considering the PF contingent liabilities maturing by the first quarter, Lotte Construction's liquidity risk could emerge.
Lotte Construction emphasized that the 3.2 trillion KRW in unstarted PFs is not highly risky upon closer examination. Projects in the Seoul metropolitan area, including Seoul, account for 1.6 trillion KRW, and the metropolitan area is generally considered to have a low risk of unsold units.
Regarding projects in provincial areas, Lotte Construction explained that many locations, such as Centum in Haeundae, Busan, have excellent sales potential, so there are no issues with sales.
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Lotte Construction stated, "We currently hold more than 2 trillion KRW in cash equivalents, and most of the 1.8 trillion KRW in borrowings maturing this year have completed extension negotiations, with some still in progress," adding, "We reduced 1.6 trillion KRW of PF contingent liabilities last year, and plan to reduce another 1.6 trillion KRW this year to secure a stable financial structure."
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