South Korea’s Lotte suspends hotel unit IPO

lotte-hotel-seoul

Lotte Hotel Seoul

THE planned initial public offering (IPO) for Lotte Group’s hotel unit in South Korea has been delayed indefinitely as the conglomerate is currently embroiled in a bribery investigation.

Hotel Lotte Co. was scheduled to initiate discussions with potential investors on June 6 but the meeting was cancelled with no new date set.

Explaining the situation, Justin Kim, service industry analyst with Seoul-based Woori Investment & Securities, said: “The results have not been released yet, but the company has confirmed that it is under investigation. That means its filings will have to be revised, and then the stock exchange will have to reapprove those filings.”

The Lotte Group has a wide range of business interests and more than 100 trillion won (US$86.4 billion) in assets, but the conglomerate has been implicated in a series of scandals since last year when a power struggle broke out among the founding family.

“The Lotte Group has been involved with a lot of issues recently, with governance as one of the big problems. Nobody knows what is going to happen with the listing now. But I think it is clear that damage has been done to the brand image,” Kim told TTG Asia e-Daily.

In early June, prosecutors raided the offices of Hotel Lotte Co. in connection with allegations that executives took bribes in return for preferential treatment of a cosmetics company in Lotte’s duty-free shops.

These allegations are significant because the hotel unit’s duty free sales accounted for more than 85 per cent of total revenue in the last quarter.

As well as being the third-largest operator of duty free outlets in the world, Lotte is the largest hotel company in South Korea. The group also manages the Lotte World amusement parks.

Sponsored Post