Following the appeals court’s suspension of his sentence last week, Lotte Group Chairman Shin Dong-bin returned to work Monday after eight months away, facing pending decisions including kick-starting Lotte Chemical’s 4 trillion-won ($3.5 billion) petrochemicals project in Indonesia and completing the group’s corporate governance overhaul plan.
The leader’s absence had dealt a blow to the country’s fifth-largest conglomerate, where about 10 mergers and acquisitions deals here and abroad, worth some 11 trillion won, have been put on hold this year, according to the group.
“Due to Chairman Shin’s absence, we were unable to make important management decisions and fulfill social responsibilities. For business normalization, the chairman will focus on looking into pending issues and making decisions,” said the spokesperson of Lotte Group.
On his first day back, Shin met with Lotte Group Vice Chairman Hwang Gag-gyu and the vice chairmen of the four business units for chemicals, food, hotel and services and retail, the group added.
Lotte Group Chairman Shin Dong-bin arrives at Lotte World Tower on his first day back on Monday after eight months behind bars. (Yonhap)
Shin had been behind bars since late February for his involvement in the corruption scandal that led to the impeachment of former President Park Geun-hye in 2016. The Seoul High Court released Shin on Friday upon sentencing him to 2 1/2 years in prison suspended for four years.
Lotte Chemical’s petrochemicals project in Indonesia that has been on hold due to Shin’s absence is expected to be at the top of his agenda as Lotte Group aims to shift its profit generator from retail to petrochemicals.
To beef up its petrochemicals business, Lotte Chemical had initially planned to begin construction of the petrochemicals complex, which is to include naphtha cracking centers, in Indonesia’s coastal industrial city of Cilegon in Banten province in the second half of the year. However, the plan has been held back.
In a deal with Indonesia’s state-run Krakatau Steel signed in 2016, Lotte Chemical purchased the rights to use some 500,000 square meters of land owned by the steel company to build the petrochemicals complex in 2016.
Shin may visit Indonesia as part of efforts to resume construction of the project for which the group has decided to invest some 4 trillion won, which would be its largest single project to date.
Progress is also expected on absorbing Lotte Chemical into the group’s holding company Lotte Corp., as well as conducting a companywide reshuffle at Lotte Shopping and proceeding with the public listing of affiliates such as Lotte Hotel.
“Lotte finalized major business revamp measures involving Lotte Capital, Lotte Insurance and the spinoff merger of seven affiliates within a week after the ownership family’s bribery trials last December. We predict an early reorganization at Lotte with Chairman Shin Dong-bin’s return,” analysts Yoon Tae-ho and Cha Joo-young at Korea Investment and Securities said in a report.
Lotte Chemical and Lotte Hotel are slated to hold a board of directors meeting Wednesday, followed by one at Lotte Shopping on Thursday to decide on key business deals and plans.
Industry experts are raising the possibility of Lotte Chemical being absorbed into the group’s holding company earlier than expected, to complete the group’s transition.
“Lotte Corp. (the group’s holding company) needs financial resources from Lotte Chemical’s dividends for future investments and an overhaul. Lotte Chemical’s shares have dropped 45 percent compared to this year’s high, which has created a favorable environment for Lotte to purchase Lotte Chemical’s shares,” Yoon said.
A year ago Lotte launched its new holding company to strengthen Shin’s control of the group and simplify its complex cross-holding structure. But Lotte Chemical, Lotte Property & Development and Lotte Engineering & Construction have not yet been absorbed into the holding company.
Upon Shin’s return, shares of Lotte affiliates rose on the local bourse, with Lotte Corp. closing the trading day up 2.68 percent to 57,500 won per share, Lotte Foods rising 3.42 percent and Lotte Chemical increasing 3.05 percent
By Kim Bo-gyung (firstname.lastname@example.org