Hotel Lotte IPO faces further delay amid leadership vacuum
[THE INVESTOR] Hotel Lotte’s KOSPI listing, which is considered a crucial step for Lotte Group Chairman Shin Dong-bin to strengthen his influence across affiliates, is expected to face a further delay, according to a top executive on May 10.
“We will go public when things are ready,” Lotte Vice Chairman Hwang Gak-kyu told reporters after an industrial meeting with Fair Trade Commission chief Kim Sang-jo. “We still need time to prepare. Hotel Lotte’s earnings should improve to a certain extent, so that investors can evaluate it as one worth funding.”
Currently, Japan-based Lotte Holdings, which is 50 percent owned by Japanese packaging firm Kojunsha, owns almost the entire stake in Hotel Lotte. The Lotte chairman has been seeking to list the hotel chain in Korea by the end of this year in order to reduce the influence of his elder brother Shin Dong-joo, the largest shareholder of Kojunsha.
The main reason for the delay is a leadership vacuum. Shin was sentenced to 2 1/2 years in prison in February for giving 7 billion won (US$6.40 million) funds to a foundation run by ex-President Park Geun-hye’s close aide. He is currently preparing for an appellate trial.
The hotel’s slowing duty-free sales, hit hard by China’s travel ban to Korea in retaliation against the deployment of the THAAD missile defense system, is also an issue. Despite some positive signs of recovery in relations between Korea and China, the Chinese authorities still are not allowing travel agencies to use hotels or duty-free stores of Lotte that offered its golf course for the THAAD site.
“This month, China’s tourism agency once again excluded Lotte for package tours from Chongqing province. We are hoping the travel ban will be lifted gradually but there is no sign of an immediate breakthrough,” a Lotte spokesperson told The Investor on condition of anonymity.
By Song Seung-hyun (firstname.lastname@example.org)