SEOUL, June 13: South Korea’s Lotte Group said it would difficult for its hotel unit’s IPO to meet a July deadline as planned, as the conglomerate grapples with the fallout from raids by prosecutors on it offices and several of its units last week. But it is premature to definitively say that the offering, which had been expected to raise up to $4.5 billion and was billed as the world’s biggest this year, will be postponed or cancelled, a spokeswoman for the group said on Monday. For some analysts, there was little chance that the deal would go ahead in the near future given the raids – which three people with direct knowledge of the matter have said were part of an investigation into a possible slush fund. “The deal has failed; they won’t be able to fetch the price they have set,” said Chung Sun-sup, head of corporate analysis firm Chaebul.com. The raids were the second setback this month for the deal. Last Tuesday, Hotel Lotte cut the size of the IPO and pushed back the listing from June to July, after prosecutors launched a bribery investigation into a director. According to stock exchange rules, the deadline for Hotel Lotte to list is July 27, six months from the preliminary approval for the IPO. If it needs to refile its prospectus to warn investors about risks from Friday’s probe, which appears likely, it would probably not be able to meet that deadline, an exchange official told Reuters on Friday. In another setback for the group, Lotte Chemical said on Friday it had withdrawn from the bidding for U.S.-based Axiall Corp, which went to a rival suitor for $2.3 billion, citing “the difficult situation Lotte has faced in Korea recently and heated competition”. Shares of Lotte group firms fell sharply on Monday morning. Lotte Shopping and Lotte Confectionery were each down 6.5 percent, while Lotte Chemical Corp was 3.9 percent lower. The broader market was down 1.5 percent. (AGENCIES)
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