Lotte promises to boost corporate transparency through IPO

By Park Sae-jin Posted : May 30, 2016, 17:22 Updated : May 30, 2016, 17:22

[Courtesy of Lotte Department Store]


South Korea's Lotte Group promised Monday to boost corporate governance in an effort to refresh its image tainted by a family feud ahead of the listing of the group's hotel and duty-free operating unit.

An IR conference for the initial public offering (IPO) of Hotel Lotte on June 29 was led by group chairman Shin Dong-bin who said Lotte would be reborn to become "a reliable entity with transparent corporate governance". Hotel Lotte will hold a series of roadshows next month in New York, London, Singapore and Hong Kong. Marget estimates on the offering range from 4.6 trillion (3.8 billion US dollars) to 5.7 trillion won.

"We're thinking about an open management system," Shin said, adding the group would step up efforts to increase transparent management and social responsibility. Hotel Lotte has promised to expand its duty-free and other businesses.

Lotte, South Korea's fifth largest family-run conglomerate, has been engulfed in a protracted fraternal feud as its ailing founder, Shin Kyuk-ho, 94, was in his dotage without making a clear decision on his successor. His younger son, Shin Dong-bin, now holds the support of South Korean and Japanese shareholders, but his elder brother, Shin Dong-joo, has refused to give up his bid for managerial control of the retail and hotel giant.

The feud began in late 2014 when Dong-bin seized control of Lotte Holdings, the group's Tokyo-based holding company, in a bid to succeed his father.

In July last year, the ailing father fired his younger son, but Dong-bin fought back by sacking his father, insisting his father cannot name an heir because he has been mentally incompetent with age. Since then, the two sons have continued to challenge each other's claims to the empire.

Under the command of Dong-bin, Lotte Shopping, the group's key unit, posted a 22 percent on-year drop in its first-quarter operating profit due to weaker operating performance in its hypermarket and home shopping businesses.

Aju News Lim Chang-won = cwlim34@ajunews.com
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