Lotte Chemical Titan cuts IPO price and size

Company decreases share offering by 23% due to poor response

PETALING JAYA: Lotte Chemical Titan Holding Bhd has priced its shares at RM6.50 each, sharply lower than what the Bursa Malaysia Main Market-bound company had originally hoped for, amid tepid response from investors.

The company had earlier reduced the size of its initial public offering (IPO) by almost a quarter.

In a filing with Bursa Malaysia yesterday, a statement issued by Maybank Investment Bank Bhd (Maybank IB) said the institutional offering would now involve only 524.22 million shares, compared with the original number of shares to be offered of 684.7 million.

The integrated petrochemical producer was relaunching its IPO at a lower price than initially targeted, following the lukewarm investor appetite.

“Lotte Chemical has reduced the number of new shares offered to institutions by nearly one-quarter due to a lack of strong response for the shares at RM8 each,” one banker said.

Maybank IB said although the institutional offering had been scheduled to close last Friday, the price determination date did not occur after taking into account the overall demand through price discovery.

“The company (Lotte Chemical), after consultation with the joint global coordinators, decided to reduce the offering size for the institutional offering, which will now involve 524.22 million shares,” it said.

The closing time and date of the institutional offering was revised to 10pm yesterday, while the date to determine the price would be today.

Maybank IB said the other components of the listing scheme, which is subject to clawback and reallocation, remain unchanged.

“Accordingly, Lotte Chemical’s entire enlarged issued share capital to be listed and quoted on the Main Market of Bursa Securities, assuming no exercise of the over-allotment option, will be RM6.69bil comprising 2.31 billion shares instead.

“The size of the over-allotment option of up to 55.537 million shares remains unchanged, representing up to 9.6% of the new IPO offering size,” it said.

StarBiz reported yesterday that Lotte Chemical’s new offer price would be RM6.50 a share compared with the previous range of between RM7.60 and RM8 a share.

Lotte Chemical has successfully secured five domestic cornerstone investors, name- ly, Permodalan Nasional Bhd, Maybank Asset Management Sdn Bhd, Maybank Islamic Asset Management Sdn Bhd, Eastspring Investments Bhd and Great Eastern Life Assurance (M) Bhd.

The lower price for the IPO is expected to draw in further quality global investors.

Lotte Chemical would have a market capitalisation of RM16.04bil if it were to be listed at RM6.50 a share.

Petronas Chemicals Group Bhd is trading at a current price-to-earnings ratio of 15.78 times with a market capitalisation of RM56.8bil.

In its prospectus, Lotte Chemical said proceeds from its IPO would be utilised over the next 12 to 36 months to finance the company’s expansion in Malaysia and Indonesia, with the majority of the gross proceeds being used to partially fund the development of an RM15.5bil integrated petrochemical facility in Indonesia.

Lotte Chemical has plans to use the money raised to also construct a new polypropylene plant in Johor to increase production by 200 kilo tonnes per annum (KTA). Lotte Chemical owns two naptha cracker plants with a combined capacity of 700 KTA in Malaysia.