Lotte Engineering Issues 200 Billion Won ABS with AAA Credit Rating

Lotte Engineering has issued 200 billion won in asset-backed securities (ABS) backed by construction payment bonds. Including this issuance, the company has raised a total of 800 billion won through the securitization of construction payment bonds this year.

On October 1, Lotte Engineering announced the issuance of its third ABS, which has a credit rating of 'AAA' and a maturity of one year. KB Kookmin Bank acted as the lead manager, with Kiwoom Securities, Samsung Securities, Korea Investment & Securities, and KB Securities participating as underwriters. Earlier, the company issued ABS worth 300 billion won in May and July.

This ABS is backed by construction payment bonds from six projects, including residential sites and group affiliate projects. The company secured the 'AAA' credit rating by incorporating affiliate project sites and combining bank credit facilities with deposit management.

Lotte Engineering expects to accelerate the collection of construction payments, aiming to recover approximately 470 billion won in construction costs by the first half of next year. The company anticipates that this will improve cash flow and diversify its funding sources.

The company is also reducing its project financing (PF) contingent liabilities. Lotte Engineering has fully repaid 1.2 trillion won of the senior debt from its 2.3 trillion won PF fund, 'Project Charlotte,' established at the group level. The remaining 1 trillion won is planned to be reduced to around 800 billion won by the end of the year through additional repayments and restructuring.

Overall, Lotte Engineering aims to decrease its total PF contingent liabilities from 2.4 trillion won at the end of August to around 2.2 trillion won by year-end.

A Lotte Engineering official stated, "The issuance of this third ABS, following the first and second, reaffirms market confidence in our self-developed financial products. We will maintain financial soundness and continue to improve our performance through proactive liquidity management and PF risk management."