Go to Contents Go to Navigation

Hotel Lotte IPO clouded by bribery investigation

All News 15:17 June 05, 2016

SEOUL, June 5 (Yonhap) -- Hotel Lotte Co.'s proposed initial public offering (IPO) has faced another setback as senior officials have come under investigation for alleged bribery related to its duty-free business, raising the possibility of delaying its listing schedule, according to industry and company officials on Sunday.

Lotte's hotel and duty-free unit has been preparing to list its shares on the Seoul bourse on June 29, planning a series of overseas roadshows starting from this week to attract offshore investors.

The first overseas deal roadshow slated for Monday in Hong Kong, however, was canceled after prosecutors on Thursday raided its duty-free business department in Seoul and the house of Shin Young-ja, the head of the Lotte Foundation and daughter of group founder Shin Kyuk-ho, on allegations of bribery.

The 74-year-old Shin and other company officials are suspected of receiving kickbacks from Jung Woon-ho, chief of the scandal-ridden cosmetics brand Nature Republic, in return for a favorable space in Lotte's duty-free shops. Both Shin and Hotel Lotte flatly denied the allegations.

"We must report important changes, such as the prosecution's investigation, to the Financial Services Commission and the Korea Exchange before the listing," a senior Lotte official said on the condition of anonymity. "Due to a lack of time before the extended holiday, we couldn't proceed with the deal roadshows as scheduled. As a result, the first roadshow in Hong Kong was effectively canceled."

Lotte said it will consult with financial authorities on Tuesday to readjust the schedules on the deal roadshows and listing, noting it will proceed with the IPO plan regardless of the prosecution's investigation.

It remains unclear whether the adjustment will only involve the overseas roadshow schedules or also include the postponement of listings.

The latest development is another setback for the retail giant with subsidiaries that have been involved in irregularities. Its home shopping channel, Lotte Homeshopping, last week faced the suspension of prime time broadcasting for submitting false documents to renew its business license last year.

The listing is one of the reform pledges that Lotte Chairman Shin Dong-bin made as part of efforts to improve his group's corporate image following a bitter succession feud with his elder brother for control of the retail-focused conglomerate, which has sprawling businesses both in South Korea and Japan.

The offering is estimated to be between 4.6 trillion (US$3.8 billion) and 5.7 trillion won, and its medium price range will surpass the record IPO amount of a 4.9 trillion sale by Samsung Life Insurance Co. in 2010.

Hotel Lotte, the world's No. 3 duty-free operator, said it will use the funds to step up its duty-free business, hotel chain and theme park to offer comprehensive options to travelers. The duty-free business is the company's key source of income, accounting for 86 percent of its total sales.

ejkim@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!