Lotte Group, the conglomerate involved in everything from candy making to operating shopping malls, plans to pledge the tallest building in South Korea as collateral to the banking sector to ease concerns over liquidity at its battery materials unit.

The offer of collateral comes after Lotte Chemical Corp, hurt by a recent downturn in the petrochemical industry, failed to comply with a financial ratio, according to a regulatory filing. The affiliate will hold a meeting for bondholders on Dec 19 in an effort to have the interest coverage ratio clause adjusted. 

The petrochemicals industry is on the verge of overcapacity and new supply may outstrip demand in the coming years, according to data compiled by BloombergNEF. Higher borrowing costs have also hit South Korea’s economy, with consumer confidence falling and real estate purchases overseas souring rapidly.

Lotte World Tower, the building to be pledged by the group, is one of the 10 tallest properties in the world and is about the same height as New York’s One World Trade Center. Lotte Chemical has no problem in repaying the principal and interest of bonds, the group said earlier.

Separately, the group also plans to sell a majority stake in South Korea’s largest car rental company, local media reported recently.

  - Bloomberg