이 기사는 2020년 06월 17일 08시00분 thebell에 표출된 기사입니다

South Korea’s Lotte Corp is raising funds externally to give a boost to its beleaguered bottled water business.

Lotte Changbai Beverage, which is a wholly owned subsidiary of Lotte Corp, plans to issue new shares in a private placement, sources said on June 15. The proceeds from the offering will be used for capital expenditure and working capital requirements of the company. Deloitte Anjin is managing the deal.

Lotte Corp has received non-binding offers from potential investors, with binding offers expected to be submitted soon. There are also possibilities that Lotte Corp may sell part of its stake in the transaction, according to sources.

The company’s history within Lotte Group dates back to 2011 when Lotte Chilsung Beverage acquired a water bottling company based in Jilin, China to establish Lotte Changbai Beverage. Lotte Corp, the holding company of the conglomerate, currently holds a 100 percent stake in the company after Lotte Group's conversion into a holding company system in 2017.

The company produces 1300 tons of spring water annually, with part of them exported to South Korea and the rest distributed in the Chinese market. Lotte Changbai Beverage is one of a handful of companies that have a business license to sell mineral water extracted from springs in Backdu Mountain.

Lotte Group is seemingly keen to keep its bottled water operation in China. It excluded the company from the list of candidates for Chinese assets sale even when the conglomerate was hit hard by the conflict between South Korea and China triggered by the placement of Terminal High Altitude Area Defense (THAAD) missile system in 2018.

Lotte Changbai Beverage has been aggressive in marketing its spring water brands to boost sales. But the company is said to be experiencing financial difficulties due to rising production and logistics costs.

“It is correct that we are searching for potential partners to invest in Lotte Changbai Beverage but it is difficult to comment on details,” a representative for Lotte Group said.

(Reporting by Ar-rum Rho)