Lotte cleans up structure in wake of family dispute

Home > Business > Industry

print dictionary print

Lotte cleans up structure in wake of family dispute

테스트

Lotte Chairman Shin Dong-bin, second from left, met with Indian Prime Minister Narendra Modi, center, in New Delhi to discuss business projects. Provided by the company

Lotte Group has accelerated changes to its ownership structure in a bid to ease the group’s complex cross-shareholding system as Chairman Shin Dong-bin acquired a 1.3 percent share in Lotte Confectionery, held by Lotte Construction & Engineering.

The chairman’s purchase will cut Lotte’s cross-shareholding links by 34 percent from 416 to 276, said the group’s task force in charge of restructuring corporate governance on Friday.

Lotte Group said earlier this week it launched the task force to overhaul the company’s structure.

The group faced demands to change its corporate governance structure after a bitter company succession battle exposed a poor, murky corporate governance of the country’s fifth largest
conglomerate.

Chairman Shin pledged to reduce 80 percent of its cross-shareholdings by the end of this year and take public Hotel Lotte, the de facto holding company of local Lotte affiliates.

Financial regulators are pushing the conglomerate to list more subsidiaries in a bid to get essential financial information on the group’s sprawling businesses.

Kim Won-dae, a senior official at the Korea Exchange (KRX), met with his counterparts from the Lotte Group on Thursday and told them that about 20 subsidiaries of the group meet requirements for an initial public offering (IPO).

Under the law, listing a company on the Kospi market requires one of three conditions: 30 billion won ($25 million) of equity; at least one million of stocks listed; and 70 billion won of annual sales on average for the previous three years.

According to the KRX, the Lotte Group has a total of 80 subsidiaries, but only eight have been listed.

At the meeting, the KRX officials proposed some advantages for a Lotte subsidiary, such as a so-called “fast track” system that reduces the normal period for audit from 45 business days to 20.

“We are providing some convenience for companies that are assumed to meet the listing requirements,” said Dan Il-soon, director at the Kospi Market Service Team at the KRX.

The KRX officials also proposed a stock split for the group on already listed subsidiaries, such as Lotte Confectionary, which cost more than 1 million won per share.

“Including the Lotte subsidiaries, we are also considering other large-cap companies for a stock split, such as KCC, Orion, or Ottogi,” said Dan. “Their shares are not frequently traded due to high prices.”

While the group struggles to improve its corporate governance, Shin flew to India. He proposed establishing shopping complexes connected to populous railway stations in India during his meeting with Indian Prime Minister Narendra Modi in New Delhi, the company said on Friday.

The chairman visited the country to oversee businesses outside of Korea after settling the highly publicized family feud over control of the retail giant.

At the meeting, the chairman suggested building shopping centers integrated with railway stations in New Delhi, Mumbai and Chennai, according to the group.

The proposal is part of the retail group’s business focus to build shopping and cultural complexes abroad - especially in emerging economies in Asia.

Shin’s visit to India follows his stay in Malaysia where he met the country’s Prime Minister Najib Razak to request support for Lotte’s operations there.


BY PARK EUN-JEE, KIM HEE-JIN [park.eunjee@joongang.co.kr]

More in Industry

Contract signed for Covid-19 vaccine

Teas the season

Empty Chairs at Empty Table

Is China's post-Thaad ban on Korean games finally over?

Local fast fashion booms as Uniqlo tanks, pandemic hits

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now