Key Takeaways
- • TPG's Lexicon Korea Holdco has borrowed the entire 831.7 billion won needed for a tender offer for the remaining 38.83% of Lotte Rental, financed from KB Securities and Woori Bank at a minimum fixed rate of 5.85% over five years.
- • The tender offer runs from Nov. 6 through Dec. 3, 2026, targeting 14,097,325 shares at 59,000 won per share, the same price set in the August stock purchase agreement with Lotte Group.
- • The collateral is Lotte Rental stock, including the 61.17% control stake acquired on Oct. 30, creating a post-leveraged buyout structure in which the control stake is used to support acquisition debt.
- • Analysts estimate close to 40% of the 2.1422 trillion won total needed to secure 100% of Lotte Rental will be covered by borrowings.
- • TPG plans to buy all tendered shares regardless of the subscription rate and then take Lotte Rental fully private through squeeze-outs and a comprehensive share swap.
Summary
TPG, which became the new owner of Korea's largest rental car company Lotte Rental, has launched a tender offer for the remaining shares, according to ChosunBiz. The offer is funded entirely with debt, forming what the article describes as a "post-leveraged buyout (LBO)" structure in which the control stake was bought with equity and the remaining shares are being bought with borrowings.
According to investment banking industry sources cited by ChosunBiz, TPG's special-purpose company Lexicon Korea Holdco borrowed the full 831.7 billion won for the tender offer from KB Securities and Woori Bank. The loan agreement was signed on Oct. 27 with a five-year maturity and a minimum fixed annual interest rate of 5.85%. The collateral is Lotte Rental stock. On Oct. 30, the closing date of the control stake transaction, Lexicon pledged its entire 61.17% stake, received from Hotel Lotte and Busan Lotte Hotel, to the lenders, and the same pledge is expected to extend to the shares acquired through the tender offer. KB Securities, a lead lender, is managing the offer. Lexicon deposited 166.3 billion won of the borrowings into a KB Securities account on Nov. 4 and plans to fund the remaining 665.4 billion won by Nov. 30.
The tender offer targets 14,097,325 shares, a 38.83% stake, at 59,000 won per share, the same price set when TPG signed the stock purchase agreement with Lotte Group in August. At the SPA stage, TPG was reportedly preferred over domestic strategic investors because it proposed paying 1.3105 trillion won using fund capital without acquisition financing. Lotte Group, whose financial position had weakened to the point of issuing guaranteed bonds backed by Lotte World Tower, reportedly prioritized speed of payment. TPG had also gained ground after Affinity Equity Partners' bid for Lotte Rental fell through earlier in the year, winning exclusive negotiation rights at the end of May ahead of Hankook & Company Group.
To fund the control acquisition, Lexicon raised about 1.2059 trillion won through a paid-in capital increase on Oct. 29, issuing 1,205,925 shares at 1 million won each. Its 100% shareholder is TPG Lexicon, LP, a Cayman Islands entity. Analysts quoted by ChosunBiz say close to 40% of the 2.1422 trillion won required to secure full ownership will be financed with debt. An IB industry official characterized the structure as one that secures the seller with equity and then adds leverage against the control stake to enhance returns, adding that delisting would allow TPG to set dividends and capital structure without minority shareholder constraints.
TPG has stated it has no plans for a merger, split, or business transfer following the tender offer. Regardless of the subscription rate, it intends to acquire all tendered shares and then make Lotte Rental a wholly owned subsidiary through controlling shareholder squeeze-outs and a comprehensive share swap.
According to investment banking industry sources cited by ChosunBiz, TPG's special-purpose company Lexicon Korea Holdco borrowed the full 831.7 billion won for the tender offer from KB Securities and Woori Bank. The loan agreement was signed on Oct. 27 with a five-year maturity and a minimum fixed annual interest rate of 5.85%. The collateral is Lotte Rental stock. On Oct. 30, the closing date of the control stake transaction, Lexicon pledged its entire 61.17% stake, received from Hotel Lotte and Busan Lotte Hotel, to the lenders, and the same pledge is expected to extend to the shares acquired through the tender offer. KB Securities, a lead lender, is managing the offer. Lexicon deposited 166.3 billion won of the borrowings into a KB Securities account on Nov. 4 and plans to fund the remaining 665.4 billion won by Nov. 30.
The tender offer targets 14,097,325 shares, a 38.83% stake, at 59,000 won per share, the same price set when TPG signed the stock purchase agreement with Lotte Group in August. At the SPA stage, TPG was reportedly preferred over domestic strategic investors because it proposed paying 1.3105 trillion won using fund capital without acquisition financing. Lotte Group, whose financial position had weakened to the point of issuing guaranteed bonds backed by Lotte World Tower, reportedly prioritized speed of payment. TPG had also gained ground after Affinity Equity Partners' bid for Lotte Rental fell through earlier in the year, winning exclusive negotiation rights at the end of May ahead of Hankook & Company Group.
To fund the control acquisition, Lexicon raised about 1.2059 trillion won through a paid-in capital increase on Oct. 29, issuing 1,205,925 shares at 1 million won each. Its 100% shareholder is TPG Lexicon, LP, a Cayman Islands entity. Analysts quoted by ChosunBiz say close to 40% of the 2.1422 trillion won required to secure full ownership will be financed with debt. An IB industry official characterized the structure as one that secures the seller with equity and then adds leverage against the control stake to enhance returns, adding that delisting would allow TPG to set dividends and capital structure without minority shareholder constraints.
TPG has stated it has no plans for a merger, split, or business transfer following the tender offer. Regardless of the subscription rate, it intends to acquire all tendered shares and then make Lotte Rental a wholly owned subsidiary through controlling shareholder squeeze-outs and a comprehensive share swap.
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