Lotte Construction Scales Up Capital by 700 Billion Won... Debt Ratio to Drop by 40 Percentage Points

First Issuance in December, Second in January
Focusing Business Capabilities on Projects Like Seongsu District 4

Lotte Construction has raised 700 billion won in funding as part of its efforts to improve its financial structure. Amid a prolonged downturn in the construction market, the company is proactively increasing its capital to address liquidity risks.

Lotte Construction announced on February 3 that it issued a total of 700 billion won in hybrid securities—350 billion won each on December 29 of last year and January 29 of this year. Hybrid securities, also known as "hybrid bonds," are formally classified as debt (bonds) but are recorded as equity on the balance sheet. They have a long maturity of over 30 years and can be repaid at the company's discretion. Unlike issuing new shares (paid-in capital increase), this method allows companies to improve their financial indicators without diluting the holdings of major shareholders. It has become a favored financing method among mid- to large-sized construction firms facing tight cash flow conditions.

Lotte Construction Headquarters, Seocho-gu, Seoul. Photo by Yonhap News

With this issuance, Lotte Construction's total equity will increase from 2.8 trillion won to 3.5 trillion won. On a consolidated basis, the company's debt ratio is expected to drop by more than 40 percentage points, from 214% in the third quarter of last year to the 170% range. Separately, Lotte Construction has secured over 1 trillion won in deposits by raising an additional 600 billion won through bank loans and the issuance of commercial paper (CP).

Lotte Construction's focus on strengthening its financial base is seen as preparation for large-scale urban redevelopment projects. This move is aimed at securing construction rights in key areas, such as the redevelopment of District 4 in the Seongsu Strategic Redevelopment Zone in Seongdong-gu, Seoul. A company representative stated, "Based on our stable financial structure, we plan to concentrate our business capabilities on high-potential sites such as Seongsu District 4."

This content was produced with the assistance of AI translation services.