NPS will go along with Lotte’s reorganizationKorea’s state-run National Pension Fund (NPS) said Friday that is has decided to vote to support Lotte Group in the reorganization of its four affiliates through a restructuring plan.
Lotte has pushed to reorganize four listed affiliates - Lotte Shopping, Lotte Chilsung Beverage, Lotte Confectionery and Lotte Foods - into a holding and operating company.
One holding company would be formed under Lotte Confectionery in what many analysts view as a move to strengthen the Lotte chairman’s control amid a bitter dispute with his brother.
The NPS holds a 6.07-percent stake in Lotte Shopping, a 4.03-percent stake in Lotte Confectionery, a 10.54-percent stake in Lotte Chilsung Beverage and a 12.3-percent share in Lotte Foods.
A group of individual shareholders of the Lotte affiliates have opposed the plan, saying it is aimed at shifting business risks of Lotte Shopping to the three other affiliates.
The individual shareholders have asked the NPS not to vote for Lotte’s merger plan.
Lee Seong-ho, head of the shareholders’ group, said the merger plan “is not aimed at enhancing the interest of shareholders, but a scheme by the management to dump the serious business risks of Lotte Shopping on shareholders of the other three affiliates.”
The four affiliates plan to hold shareholders’ meetings next week to vote on the plan. If approved, Lotte plans to change its structure to a holding company, which it claims would improve transparency and enhance accountability, in early October.
In order for the proposal to pass it would need to have more than half of the companies’ shareholders in attendance, and then secure two thirds of the participating shareholders’ votes.
The shares of the four companies fell on the stock market on Friday.
Lotte Shopping saw its shares drop 1.28 percent to close at 270,000 won ($240) while Lotte Chilsung Beverage’s shares fell 0.65 percent to close at 1,526,000 won. Lotte Confectionary dipped 0.25 percent to close at 196,500 won and Lotte Foods was down 1.82 percent to 594,000 won.
BY LEE HO-JEONG, YONHAP [firstname.lastname@example.org]