Lotte Group Says ‘Difficult’ to Carry Out Hotel IPO Proceduresby
Delay of hotel unit comes amid raid on alleged slush funds
Lotte Group says it will fully cooperate on investigations
Lotte Group said it has become difficult for its hotel unit to carry out steps needed for an initial share sale, hinting that listing of Hotel Lotte Co. could be indefinitely delayed as investigation into the group widens.
“Having been approved with its listing applications, Hotel Lotte should complete procedures for the IPO by July, but it is physically difficult to fulfill steps such as modifying filing for investor protections,” the group said in an e-mailed statement today.
South Korean prosecutors are investigating bribery and embezzlement allegations involving company executives. The conglomerate’s headquarters and offices of some of its units are being searched, a crisis that comes as Lotte seeks to raise about $4.5 billion by listing its hotel unit.
The Japanese-Korean conglomerate is under public scrutiny amid allegations that a lot of its earnings generated in South Korea is flowing out to the group’s Japanese units. Listing of its hotel unit was part of the plan to improve transparency in governance structure amid criticism the owner family controls its affiliates through complicated cross-shareholding arrangement.