[News Space=Reporter seungwon lee] Lotte Rental (CEO Choi Jin-hwan) received a reaffirmation of its investment grade rating of 'Baa3' from global leading credit rating agency Moody's and obtained a 'stable' outlook.

This reevaluation was conducted in accordance with the announcement that the largest shareholders, Hotel Lotte and Busan Lotte Hotel, had agreed on the purchase price and terms for selling their Lotte Rental shares to global private equity fund Affinity Equity Partners (hereinafter referred to as “Affinity”) and that they planned to sign a stock purchase agreement within two weeks.

Moody's credit rating of Lotte Rental, which was conducted on a rolling basis due to changes in the company's largest shareholder, was determined by reflecting a multifaceted corporate evaluation including corporate performance, management credibility, and government regulations, as well as the impact of changes in governance and brand usage agreements.

The impact of Affinity’s stake acquisition on Lotte Rental’s financial strategy, risk management, board structure, policies, and procedures was taken into consideration. Moody’s explained Lotte Rental’s ▲largest domestic sales network and excellent management performance ▲excellent EBITDA and interest expense coverage ▲capability to secure liquidity based on a large asset base as the reasons for reaffirming the investment grade rating.

In addition, Moody's evaluation is interpreted as a positive assessment that the company's financial soundness will be maintained and its market position will be strengthened even after the change in the management structure, and mid- to long-term performance improvement is expected by securing future growth engines. Lotte Rental's EBITDA, which shows the company's actual cash generation ability through earnings before interest and taxes, is KRW 1.3627 trillion as of 2024. The interest coverage ratio (operating profit/interest expense) is usually evaluated as a company with excellent financial soundness when it exceeds 1.5, and Lotte Rental's interest coverage ratio is 1.8 times.

Last year, Lotte Rental was the first in the domestic rental industry to receive investment grade ratings from two global credit rating agencies, Moody's and Fitch. The 'Baa3' received from Moody's is the same credit rating as Tesla in the US and SK Innovation in Korea. It is equivalent to AA+ to AA- in terms of domestic credit rating agencies. Lotte Rental also received 'Baa3' in its independent credit rating, excluding affiliate support and government support, which is the same rating as Korea Electric Power Corporation and domestic excellent capital companies in terms of independent credit rating.

With this Moody's credit rating recertification, Lotte Rental's funding interest rate is expected to decrease overall. Lotte Rental is evaluated to have established a foundation for overseas funding and plans to continuously strengthen its funding competitiveness.

A Lotte Rental official said, “This reaffirmation of Moody’s credit rating is significant in that it means that Lotte Rental’s fundamental excellence and stability have been positively evaluated by a global rating agency despite the change in governance,” adding, “Based on this result, we will strive to provide better services to our customers by strengthening our procurement competitiveness, such as securing overseas investors.”

Lotte Rental is Korea's No. 1 rental car brand, Lotte Rent-a-Car, a car sharing service, Lotte Rent-a-Car G Car, a used car auction house, and Lotte Auto Auction, a car management company. It is the only comprehensive rental company in Korea with a full lineup of car life products. As of 2024, it recorded sales of KRW 2.8029 trillion and operating profit of KRW 284.8 billion.