SOUTH KOREA. A bribery scandal has forced the delay of Hotel Lotte’s much anticipated Initial Public Offering (IPO) until next month, the retail-to-leisure giant confirmed yesterday.
The parent company of Lotte Duty Free announced the delay in official documentation relating to the IPO that was served to Korea Exchange (KRX). The original listing, one of the biggest in Korean history, was due to take place around 29-30 June but is now likely to happen around 21-22 July.
Hotel Lotte also revised its valuation of the IPO to a maximum KW5.26 trillion (US$4.6 billion) from the previous KW5.74 trillion (US$4.96 billion)
The shares will be reduced by between 8% at the low high end and 12% at the high end, respectively, to KW85,000 (US$73.47) to KW110,000 (US$95.08) each. A firm price will be set on 11 July.
A prominent source in the Korean investment community told The Moodie Davitt Report: “Investors – institutional as well as individuals – will have to apply for the deal on 12–13 July instead of 21-22 June. This was a part of the official disclosure. The actual payment date is 18 July (formerly 24 June).”
The main reason for the delay is a bribery scandal that is dominating Korean media headlines.
Government investigators are studying claims that Shin Young-ja, a Hotel Lotte board member and part of the founding family, received KW1.5 billion (US$1.3 million) from Nature Republic CEO Jeong Un-ho to list the latter’s brands in Lotte Duty Free shops.
Lotte Duty Free accounts for the overwhelming share of Hotel Lotte’s corporate valuation. The scandal is a second blow in quick session to the duty free division, after the controversial loss of its duty free licence at Lotte World Tower last November. That duty free operation (pictured above) will have to close at the end of this month, though the company is now optimistic it will win one of the four new licences announced by Korea Customs Service earlier this month.
That decision won’t be made until December. The restoration of the World Tower licence would offer a sharp early boost to the company’s public valuation once listed.
