[Alpha Biz=(Chicago) Reporter Paul Lee] Lotte Engineering & Construction Co., which has recently been struggling to secure liquidity, has been found to have a construction outstanding amount of KRW 1 trillion.
In particular, the unpaid amount of construction work that Lotte Chemical and other affiliates in the group have not received reached 240 billion won, adversely affecting Lotte Engineering & Construction's liquidity.
According to the Financial Supervisory Service's electronic disclosure system on the 21st, Lotte Engineering & Construction's outstanding construction amount totaled KRW 1.67 trillion as of the end of last year, up 34.4% from the previous year (KRW 794 billion). Among them, the amount of construction receivables that were not received from affiliates such as Lotte Chemical and Busan Lotte Hotel in the group was 238.8 billion won, up 44.7% from 158.1 billion won in the same period. This is equivalent to 22.4% of the outstanding amount of construction. In other words, assuming that Lotte Engineering & Construction's construction outstanding amount is 1 million won, it has not received 224,000 won from its affiliates in the group.
The outstanding amount of construction means the amount of construction cost that was claimed to the ordering company when the contracted construction was completed or the promised progress rate was reached. As the construction cost was not received, the construction was carried out with the construction company's own resources.
Uncollected construction expenses are usually low in proportion to loan-loss reserves, which is likely to lead to large-scale insolvency as construction costs cannot be recovered in the event of bankruptcy of the ordering company. This is a bond that is different from the unclaimed construction amount that is not paid because the right to claim the construction cost is not recognized due to the failure to reach the construction progress rate.
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