Evaporation of 2 Trillion Won
The stock prices of Lotte Group subsidiaries are plummeting because of the prosecution’s investigation into slush fund allegations.
The investigation has deterred Hotel Lotte from going public and Lotte Chemical from signing M&A deals abroad, which has resulted in a decrease of more than two trillion won (US$1.73 billion) in market cap this month alone.
On June 13, Lotte Shopping’s stock price closed at 211,000 won (US$183) per share, down 5.38% from the previous day. It fell for the third consecutive trading session and lost more than 8% during the session to dip down to 205,000 won (US$178) per share, only 500 won (US$0.43) higher than its 52-week low. Likewise, that of Lotte Confectionery lost 5.97% from the previous day and closed at 197,000 won (US$171) per share while each of Lotte Chilsung and Lotte Hi-Mart reached this year’s low. Lotte Chemical’s stock price dropped by 3.91%, too.
Under the circumstances, the Lotte Group’s aggregate market value dropped from 25.4441 trillion won (US$22.12 billion) to 24.3343 trillion won (US$21.16 billion) between June 10 and June 13. This month alone, the decline in its market cap amounts to 2.1135 trillion won (US$1.83 billion).
This situation is negatively affecting corporate bond issue by those subsidiaries as well. For example, Lotte Corporation recently put off its bond issue in the wake of the prosecution’s investigation. Lotte Chilsung was planning to conduct demand forecasting early next month before issuing bonds worth a total of 300 billion won (US$260 million) but has called off the plan.