The listing of Hotel Lotte on the nation’s main bourse, the largest initial public offering event expected this year, could be postponed, according to reports and sources Sunday, citing the possible negative impact of an ongoing probe involving the chairman’s elder sister on its market capitalization.
Lotte Group said it has decided to delay a series of deal roadshows set to be held in major financial markets overseas starting with Hong Kong on Monday. The group, however, has not decided whether to go ahead with the listing of Hotel Lotte on June 29 as planned, an official told The Korea Herald.
Lotte Group chairman Shin Dong-bin (Yonhap)
“Hotel Lotte will go public as planned but we are not sure whether to keep the timetable of the company’s IPO on June 29 or not,” said Song Noh-hyun, Lotte Group’s spokesman.
The group will decide whether to go public on June 29 or delay the schedules after a discussion with the nation’s market regulators on Tuesday.
The company is obliged to consult the matter with the authorities on unexpected cases such as prosecution’s investigations, before going public, it added.
The prosecution has been zeroing in on Shin Young-ja, the eldest daughter of Lotte founder Shin Kyuk-ho over an allegation that she received kickbacks from a Korean cosmetic company head in return for space in Lotte’s duty-dree shops.
Shin is a registered boardroom member of Hotel Lotte that operates the nation’s largest duty-free business. Since 1973, she has served on various executive positions in Hotel Lotte and Lotte Shopping before stepping down in 2008. She is the head of Lotte Foundation, the group’s charity organization.
The group did not have sufficient time to report the matter to authorities due to the long weekend that kicked off on Saturday for three days. On Thursday, the prosecution raided Hotel Lotte’s office in Seoul as well as the house of Shin Young-ja.
Hotel Lotte’s IPO is the center of group chairman Shin Dong-bin’s reform plans introduced in August.
Amid a bitter family feud over control of the retail business-focused conglomerate operating businesses both in Korea and Japan, the chairman vowed to make the hotel unit -- the de facto parent company of Lotte’s Korea business -- public. After ousting his elder brother, the chairman pledged to improve the transparency of Lotte Group’s governance structure and to dispel years of controversy over Lotte being controlled by its Japan affiliates.
Through the offering, the stake of Lotte Japan’s affiliates in Hotel Lotte would decline from the current 99 percent to 65 percent.
The listing would also offer momentum for Lotte’s future growth as it aims to aggressively expand its duty-free and resort businesses overseas.
But the prosecution’s investigation could frustrate Lotte’s attempt to renew its operation license for its Jamsil duty-free store. Without securing that license, the market valuation of Hotel Lotte could fall, according to industry sources.
Before the investigation begun, Hotel Lotte was widely expected to secure over 5 trillion won ($4.2 billion). It said it plans to offer 47.85 million in shares in the range of between 97,000 won to 120,000 won per share.
By Cho Chung-un (
christory@heraldcorp.com)