LG Chem’s plan to split off its battery business received final approval at a shareholders meeting at the LG Twin Towers in Yeouido, western Seoul, Friday.

The split-off required support from at least two-thirds of all shareholders in attendance, who had to possess at least one-third of all shares issued.

“About 77.5 of shareholders participated in the meeting and 82.3 of them voted yes. Also, the split-off earned support from 63.7 percent of total shares,” an LG Chem official said.

“The approval rate is significantly high. We believe almost all foreign investors voted yes. It seems the National Pension Service cast a no vote,” an LG Chem spokesman told reporters after the meeting. South Korea’s state pension fund holds a 10.4 percent stake in LG Chem. 

Following the approval, LG Chem’s battery business division will be carved out into a wholly owned subsidiary, “LG Energy Solution,” and will be officially launched Dec. 1.

It was not decided who would lead LG Energy Solution, but that matter will probably be settled in the annual reshuffle season, the spokesman added.

During the shareholders meeting, LG Chem Vice Chairman Shin Hak-cheol asked shareholders to support the split-off, saying the move would boost the company’s battery business.

“LG Chem has decided the split-off to consolidate its dominant standing in the (battery) market,” the vice chairman said.

Due to the rapid expansion of its battery production facilities, LG Chem’s net debt has surged to 8 trillion won ($7 billion) and its debt ratio exceeds 100 percent, according to the company.

To raise the cash it needs for the expansion, LG Chem plans to take LG Energy Solution public within a few years and sell off a 20 percent to 30 percent stake in the subsidiary.

“With its high-capacity cathodes, high-efficiency silicon anodes and safety reinforced separators, LG Energy Solution develops high-performance batteries with a competitive edge and will lead the market with advanced manufacturing technologies,” another LG Chem official said.

After the split-off, LG Chem will be left with three business divisions: petrochemicals, advanced materials and life sciences. 

Some retail investors, many of whom invested in LG Chem for the battery business, expressed frustration, colliding with other retail investors who endorsed the split-off.

“LG Chem should have opted for a spinoff, not a split-off. The stock, which once soared to 870,000 won, has now plummeted to 650,000 won. After LG Chem announced the split-off, the stock price nose-dived,” a shareholder protested at the scene.

In response, the vice chairman apologized for insufficient communication but asked for understanding, saying the split-off is necessary for LG Chem to maintain the No.1 spot in the global battery market.

By Kim Byung-wook (kbw@heraldcorp.com)