Sickly Lotte IPO reflects two faces of South Korea

Lotte

13/06/2016 03:31

(The author is a Reuters Breakingviews columnist.  The opinions 
expressed are his own.) 
    By Quentin Webb 
    HONG KONG, June 13 (Reuters Breakingviews) - Seoul may be 
Asia's coolest destination right now, and Lotte Group's flagship 
duty-free arm ought to profit handsomely. But raids have cast 
doubt on the unit's $4.5 bln listing and drawn attention to 
Korea's uglier side: its powerful, opaque and poorly governed 
conglomerates. 
 
        
    Full view will be published shortly. 
     
    CONTEXT NEWS 
    - South Korea's Lotte Group, whose hotel unit faces a July 
deadline to complete an initial public offering (IPO) worth up 
to $4.5 billion, said on June 12 that it was "difficult" for the 
company to modify the listing document. 
    - The statement came two days after prosecutors raided the 
offices of Lotte Group and several companies in the 
conglomerate, including Hotel Lotte. Three people with direct 
knowledge of the matter told Reuters the raids were part of an 
investigation into a possible slush fund, dealing a new blow to 
the hotel unit's planned IPO, which could be the world's biggest 
this year. 
    - Earlier last week, Hotel Lotte cut the size of the IPO and 
pushed back the listing from June to July, in a revision to its 
listing document, after prosecutors launched a bribery 
investigation into a director. 
    - Shares in Lotte Group affiliates fell sharply on the 
morning of June 13. By 10:20 a.m. in Seoul [0120 GMT] Lotte 
Confectionery stood 7.4 percent lower, Lotte Chemical had 
retreated 3.4 percent, and Lotte Shopping had dropped nearly 7 
percent. 
    - Reuters: S.Korea's Lotte says difficult to modify hotel 
unit's IPO document  urn:newsml:reuters.com:*:nL4N19407R 
    - Reuters: Seoul prosecutors raid Lotte Group, casting new 
doubt over hotel unit IPO  urn:newsml:reuters.com:*:nL4N19205Q 
 
     
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    - For previous columns by the author, Reuters customers can 
click on  WEBB/   
 
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 (On Twitter https://twitter.com/qtwebb Editing by Peter Thal 
Larsen and Kathy Gao) 
 ((quentin.webb@thomsonreuters.com;)(Reuters 
Messaging:)(quentin.webb.thomsonreuters.com@reuters.net)) 
 
Keywords: HOTELLOTTE IPO/BREAKINGVIEWS