Demonstrates commitment to responsible management through direct blood transfusion
Responding to the group-wide liquidity crisis theory
Lotte Construction, Park Hyeon-cheol appointed as new CEO
Shin Dong-bin, chairman of the Lotte Group, invested 1.1 billion won of his own money in Lotte E&C, which is suffering from financial difficulties due to real estate project financing (PF).
Lotte E&C announced on the 23rd that it had disclosed ‘changes in stock holdings by the largest shareholder.’ According to the public announcement, on the 19th, Chairman Shin acquired 9,772 common shares of Lotte Construction for 1,172.54 million won. Lotte E&C shares held by Chairman Shin increased from 188,660 shares to 198,432 shares. The share is equal to 0.59%. Chairman Shin’s direct investment of funds is interpreted as an indication of his will to conduct responsible management as a shareholder.
Lotte E&C is currently experiencing a liquidity crisis due to the bankruptcy of Legoland and is receiving funding from affiliates. Lotte E&C has transfused funds worth 1.45 trillion won in the past month. On the 18th of last month, it made a paid-in capital increase of 200 billion won, and borrowed 500 billion won from Lotte Chemical in the same month. This month, Lotte Fine Chemical and Lotte Home Shopping decided to borrow 300 billion won and 100 billion won, respectively, for three months. On the 18th, while borrowing 350 billion won from both Hana Bank and Korea Standard Chartered Bank, Lotte C&T also signed an agreement to replenish funds.
Lotte Chemical, which provided a total of 587.5 billion won to Lotte E&C, also decided on a paid-in capital increase of 1.105 trillion won on the same day. Lotte Chemical dismissed the possibility of additional support for Lotte E&C, saying that it plans to use 500 billion won for operating funds and 605 billion won for the acquisition of Iljin Materials.
When the possibility of deteriorating liquidity at Lotte E&C was raised as a crisis throughout the group, Lotte Group was wary of broad interpretation. An official from the Lotte Group said, “We have secured sufficient financial soundness by maintaining the ratio of long-term borrowings to 70% of total borrowings.” It is a scale that can sufficiently repay the amount,” he explained.
▲ Park Hyeon-cheol, CEO of Lotte E&C
Meanwhile, Lotte E&C announced that it had appointed Park Hyeon-cheol, head of the Management Improvement Office at Lotte Holdings, as the new CEO in place of CEO Ha Seok-joo, who expressed his resignation with four months left in his term of office. CEO Park joined Lotte E&C in 1985 and served as the CEO of Lotte Property and Construction, and successfully completed the construction of Lotte World Tower.
Reporter Yoon Soo-kyung