Government Approves Yeosu No. 1 Petrochemical Restructuring Plan, Backed by 700 Billion Won Package

[Financial News]  The government has approved restructuring plans for four companies: Yeocheon NCC, Lotte Chemical, Hanwha Solutions and DL Chemical. As part of the plan, the companies will reduce facilities, including shutting down aging NCC operations, and pursue self-help measures such as a 545 billion won capital increase to improve their financial structure. The government will also support the restructuring with a package worth more than 700 billion won in financing, tax benefits and research and development support.
On the 22nd, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced the measures while chairing a meeting of the Emergency Economic Headquarters and the ministerial meeting on strengthening economic and industrial competitiveness at Government Complex Seoul.
Koo said, "We need to inject new vitality into the economy through structural reform." He added, "For industries facing structural difficulties, we will support swift restructuring and build a healthy industrial ecosystem where everyone can grow."
The approved Yeosu No. 1 project is the second petrochemical restructuring plan, following the Daesan No. 1 project approved in February this year.
Hanwha Solutions and DL Chemical will contribute their D/S divisions in kind to Yeocheon NCC, and Yeocheon NCC and Lotte Chemical will merge. To ease oversupply, two aging NCC facilities will be shut down. In addition to self-rescue measures such as a 545 billion won capital increase to improve the financial structure, the companies will invest about 253.2 billion won in higher-value-added transformation and infrastructure development.
The government and creditors will also support the successful restructuring of Yeosu No. 1 with a package worth more than 700 billion won.
The package includes 450 billion won in financial support, such as new funds for higher-value-added transformation, as well as an additional 200 billion won in loan guarantees for import financing.
The deduction limit for carried-forward corporate tax losses and the acquisition tax reduction rate will be expanded to as much as 100 percent. The deferral of capital gains tax on asset sales will also be broadened.
Special provisions will also apply to permit succession when companies are split or merged.
In addition, the government will ease requirements for employment retention subsidies. If employment conditions in the Yeosu area do not improve after the designation period as a preemptive employment crisis zone, which runs through August this year, it will also consider designating the area as an employment crisis zone.

[email protected] Jung Sang-gyun Reporter