KUALA LUMPUR (April 20): Lotte Chemical Titan Holding Bhd (KL:LCTITAN) has entered into a deal to sell naphtha — a key petrochemical feedstock — to a related party to mitigate operational risks and ensure continued feedstock supply following the closure of the Strait of Hormuz amid the Iran war.

The group's wholly-owned unit, Lotte Chemical Titan (M) Sdn Bhd, is selling the crude oil distillate to PT Lotte Chemical Indonesia (LCI) for US$25.29 million (RM103.71 million), according to a filing with Bursa Malaysia on Monday.

Lotte Chemical Titan holds a 51% stake in Indonesia-based LCI, with the remaining 49% owned by the group's South Korean parent company Lotte Chemical Corp. LCI is involved in the production of basic organic and industrial gaseous chemicals.

Lotte Chemical Titan said that while the transaction is exposed to economic volatility, the group expects to take appropriate measures to mitigate risks.

It added that the deal is not expected to have any material impact on its earnings, net assets, gearing and share capital for the financial year ending Dec 31, 2026.

Save for its major shareholder Lotte Chemical Corp and its board representatives — Jang Seon Pyo, Yu Seung Yong and Park Jae Sun — none of its directors or major shareholders have any direct or indirect interest in the transaction, said the group.

Total related-party transactions undertaken by Lotte Chemical Titan over the past 12 months amounted to RM150,397, according to the group.

Shares in Lotte Chemical Titan closed half a sen or 1.35% lower at 36.5 sen on Monday, valuing the group at RM844.01 million. The stock has declined more than 8% year to date.