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(LEAD) Online site reveals Korean Lotte's dividend payouts to Japan

All News 16:05 June 13, 2016

(ATTN: UPDATES with Lotte's withdrawl of its IPO plan for hotel unit in 5-8 paras)

SEOUL, June 13 (Yonhap) -- Lotte Group affiliates in South Korea paid more than 180 billion won (US$154 million) in dividends to their Japan-based sister companies over five years through 2015, a local corporate survey company said Monday.

According to a report by Chaebul.com, an online business information provider, Lotte Holdings and other Lotte affiliates in Japan received a total of 183.24 billion won in dividend payouts from 2011 to 2015. Lotte Holdings is the de facto holding company for the retail-to-petrochemical conglomerate's far-flung operations in Korea and Japan.

"During the five-year period, Hotel Lotte sent 120.4 billion won, or 7.5 percent, of its consolidated operating profit worth 1.6 trillion won, to Lotte companies in Japan that have a stake in the hotel. The remaining 60 billion won was delivered by other Lotte firms in Korea to Lotte companies in Japan that own a stake in them," a Chabul.com official said.

If Hotel Lotte succeeds in its planned initial public offering (IPO) worth up to $4.5 billion won, shareholding Lotte companies in Japan will be able to raise hefty funds by selling the hotel stocks they own, Chabul.com said.

In a sudden twist, however, Hotel Lotte said in a statement released on Monday, "We have decided to delay our IPO plan indefinitely due mainly to the pending issues involving our company and cancel all the remaining procedures to complete the plan with an agreement from lead manager Mirae Asset Daewoo."

The pending issues indicate that the investigation was initiated by prosecutors last week to look into the formation of a possible slush fund in Hotel Lotte and other Lotte companies.

"The IPO plan is a core part of Lotte Group's corporate governance restructuring programs as it will help drive down the shareholding ratio of Japan-based Lotte companies and diversify shareholders. So we will closely consult with the lead manager and the financial authorities for a future IPO," the statement said.

The investigation is the latest blow to the country's fifth-largest conglomerate by assets which is still reeling from a feud that tore its founding family apart in recent years.

The group founder Shin Kyuk-ho's two sons -- Dong-joo and Dong-bin -- have been in a battle over control of the retail giant that has 93 affiliates in Korea, 36 more in Japan and more than 100 trillion won in assets.


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