LG Chem Seeks to Sell KRW 2.5 Trillion Stake in LG Energy Solution; to Retire KRW 300 Billion in Treasury Shares

[Financial News] LG Chem is moving to secure approximately KRW 2.5 trillion in liquidity by disposing of part of its stake in LG Energy Solution. It plans to use the funds raised for debt repayment and future investments, among other things, and allocate KRW 400 billion—about 20% of the after-tax cash proceeds—for shareholder returns. Of this, KRW 300 billion will go toward share repurchases and cancellations, with the remainder used to fund the 2026 year-end dividend.
LG Chem disclosed on the 28th that it plans to enter into a price return swap (PRS) contract using shares in its subsidiary LG Energy Solution.
A PRS is a derivative transaction in which a company enters into a contract with investors using shares it holds as the underlying asset, then settles the difference based on share-price movements during the contract period. Under the contract, the company pays fees to investors such as securities firms and settles gains or losses resulting from share-price fluctuations.
The underlying asset for this PRS contract is 6,535,939 common shares of LG Energy Solution. The reference price is KRW 382,500 per share, the previous day’s closing price, for a total value of KRW 2.5 trillion. The contract term is two years, and the proceeds from the share disposal are expected to be received on November 27.
LG Chem plans to use the funds raised to improve its financial structure, including repaying debt, and to fund future investments. Separately, it will allocate KRW 400 billion, about 20% of the after-tax cash proceeds, for shareholder returns.
Of the funds allocated for shareholder returns, KRW 300 billion will be used for share repurchases and cancellations, while the remaining approximately KRW 100 billion is expected to fund the year-end dividend for fiscal 2026.
The share repurchases will be carried out over approximately six months through a trust agreement. The company plans to buy common and preferred shares in proportion to their respective market capitalizations. This is the first time LG Chem has pursued shareholder returns through share repurchases and cancellations.
Once the share disposal is completed, LG Chem’s stake in LG Energy Solution is expected to fall by 2.8 percentage points, from 79.38% to approximately 76.6%.
Last year, LG Chem also disposed of a stake in LG Energy Solution worth approximately KRW 2 trillion and used about 10% of the after-tax cash proceeds for shareholder returns.
If LG Chem further disposes of its stake in LG Energy Solution in the future, it plans to determine the scale of shareholder returns in consideration of its financial soundness and investment capacity. If it believes the share price is undervalued relative to intrinsic value, it plans to give priority consideration to share repurchases and cancellations while maintaining dividend stability.

[email protected] Kim Mi-hee Reporter