[THE INVESTOR] Hotel Lotte, which failed to go public last year, is likely to delay listing until its duty-free business recovers from the prolonged diplomatic tensions between Beijing and Seoul over the latter’s deployment of the THAAD missile system.
“Looking at the situation now, it looks like we might have actually damaged, and not raised, shareholder value if we had gone public last year,” said Lotte Corp. CEO Hwang Kag-gyu in a press conference on Oct. 12 at Lotte World Tower in Jamsil, southeastern Seoul. “We will continue to review the listing as a part of our mid- to long-term plans.”
Lee Bong-chul, the head of Lotte Corp.’s finance division, added that the listing may not happen as long as the THAAD issue remains.
Lotte Group had applied for an IPO for Hotel Lotte -- which had until then been serving as the group’s de facto holding company -- in May 2016 after Chairman Shin Dong-bin announced related plans a year earlier. The IPO was largely seen as a move to deflect the influence of Japanese shareholders, including the chairman’s brother Shin Dong-joo. The two brothers had a bitter fight to take control of the retail giant.
However, the group later put things on hold when the owner family was summoned by the prosecution on charges of bribing former President Park Geun-hye to win a duty-free license. The faltering duty-free business of Hotel Lotte, which was hit by China’s decision to more or less ban group tours to Korea in retaliation against THAAD, was another reason behind the delay.
According to a securities report Hotel Lotte submitted in June 2016, its enterprise value was estimated at around 12.92 trillion won (US$11.44 billion), with its duty-free division taking up 12.47 trillion won. The division’s value following the THAAD situation has halved to 5.94 trillion won, according to data provided by Korea Investors Service.
By Song Seung-hyun (firstname.lastname@example.org)