Lotte E&C completes 2.3 tln-won project financing fund

Major South Korean builder Lotte Engineering and Construction Co. (Lotte E and C) said Thursday it has completed the creation of a 2.3 trillion-won (US$1.73 billion) project financing (PF) fund, which will help cut its interest burden from high-interest debt. Five local banks, including KB Kookmin Bank and the state-run Korea Development Bank, and three securities companies all had deposited their respective portions in the PF fund as of Wednesday, Lotte E and C said. The construction company also said it has succeeded in borrowing an additional 500 billion-won long-term loan from Meritz Financial Group. Lotte E and C, the construction arm of retail titan Lotte Group, said it has thus repaid a 1.5 trillion-won loan borrowed last year from Meritz Financial Group, which will reduce its interest-rate burden sharply. The builder said it plans to pay back 2 trillion won in PF-related contingent liabilities by the end of this year in an effort to boost its financial health. A contingent liability refers to a potential liability that could occur, depending on the outcome of an uncertain future event. A Lotte E and C official said the recent inflow of cash is expected to help dissipate market concerns over the builder's contingent liabilities. As of end-December last year, Lotte E and C cut its debt-equity ratio by 31 percent from a year earlier. Source: Yonhap News Agency