Lotte Engineering & Construction nominates new CEO

Park Hyun-chul, newly nominated CEO of Lotte Engineering & Construction [LOTTE ENGINEERING & CONSTRUCTION]

Lotte Engineering & Construction (E&C) nominated a new CEO as it struggles from a liquidity crisis, with Lotte Group Chairman Shin Dong-bin buying 1.17 billion won ($867,000) of newly issued shares to help the construction company.

Lotte E&C’s board of directors held a meeting Wednesday, nominating Park Hyun-chul, current president of Lotte Corporation, as the new CEO of the construction company. Lotte E&C said the date of the formal appointment has not yet been decided.

Ha Suk-joo, the current CEO of Lotte E&C, offered to resign as the company is financially struggling due to a liquidity crunch stemming from the Legoland-related default.

Iwon Jeil Cha, a special-purpose company established to fund the construction of the Legoland resort in Gangwon, was listed as bankrupt in early October. It had failed to repay 205 billion won in asset-backed commercial paper.

Following the bankruptcy, various construction businesses are now having a hard time extending maturities of their project financing loans and borrowing money to pay back the loans.

According to Korea Investors Service (KIS), Lotte E&C’s contingent liabilities stood at 6.75 trillion won as of October, which is the biggest out of all construction companies evaluated by the KIS. Of the total, 3.1 trillion won of debt will mature at the end of this year.

Lotte E&C issued a regulatory filing on Tuesday, announcing that Chairman Shin bought new shares worth 1.17 billion won. Shin’s stake in the construction company remains the same at 0.59 percent.

Various other Lotte companies also financed the company.

Hotel Lotte bought new shares worth 86.1 billion won, with its stake increasing to 43.3 percent, and Lotte Chemical bought shares worth 87.6 billion won, with its stake rising to 44.02 percent. Lotte Holdings, a holdings company based in Tokyo that owns Lotte’s Japanese businesses, bought shares worth 3.35 billion won, with its stake increasing to 1.68 percent.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]