[THE INVESTOR] Lotte Group is facing the biggest crisis in its history with a corruption probe bringing its major projects to a halt.
Following a raid on June 10, the group’s plans to acquire a U.S.-based chemicals maker have been scrapped, while listing of Hotel Lotte on the local market has reportedly been put on hold indefinitely.
In the afternoon of June 10, Lotte Chemicals Corp. scrapped its Axiall acquisition plans made public only three days prior. The plans were made formal on June 7, and Lotte Chemicals had said that the acquisition would boost its annual sales to 21 trillion won ($17.9 billion).
A woman walks by the close shutters of Lotte Department Store in Seoul on Monday. The Korea Herald
“(This is due to) the difficulties the group is facing within the country, and the fact that the biddings have become overheated,” Lotte Chemicals said when announcing the retraction of the bid. With only three days having passed since the plans were announced, pundits say that the investigation is likely to have been the main reason behind the decision.
The plans are said to have been a part of Lotte chairman
Shin Dong-bin’s personal plans to expand the group’s chemicals business.
According to sources, Shin has shown particular interest in the chemicals business since he first took on a role within Lotte’s Korean operations as vice president of Lotte Chemicals in 1990.
Plans to list Hotel Lotte have also been delayed indefinitely.
Hotel Lotte was set to be listed on KOSPI on July 21 and this was expected to be able to raise about 5.2 trillion won. The group had planned to earmark at least 2 trillion won for merger and acquisition deals and to fund overseas expansion projects.
In applying to be listed on May 19, Hotel Lotte had stated that the raised funds would help boost the company to become the “world’s largest duty free retailer, and the operator of Asia’s third largest hotels and one of the globe’s fifth largest theme parks.”
Now, however, the conglomerate must wait for the results of the probe and start the listing process from the beginning.
As for the corruption probe, the prosecution is said to have secured evidence to believe that damages of as much as 300 billion won have been dealt to the group through embezzlement and malpractice.
By Choi He-suk (
cheesuk@heraldcorp.com)
