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Hotel Lotte IPO faces delay amid bribery investigation

All News 10:40 June 07, 2016

SEOUL, June 7 (Yonhap) -- Hotel Lotte Co.'s proposed initial public offering (IPO) is expected to be postponed as senior officials have come under investigation for alleged bribery related to its duty-free business, according to sources familiar with the matter said Tuesday.

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 favorable space in Lotte's duty-free shops. Both Shin and Hotel Lotte flatly denied the allegations.

The roadshow couldn't take place as planned as Lotte must report to financial regulators and the bourse operator on important changes ahead of the listing.

On Tuesday, officials from Hotel Lotte, the Financial Services Commission and IPO managers held a meeting to discuss the issue and agreed to delay the listing schedule to carry out overseas deal roadshows, book building and other procedures.

"We are pushing to list the shares within next month, but specific details have not been confirmed yet," a senior Lotte official said.

The latest development is another setback for the retail giant with subsidiaries that have been involved in irregularities. Its home shopping channel, Lotte Homeshopping, is facing the suspension of its 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.


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