SDJ Corporation Chairman Shin Dong-joo, mired in a leadership dispute with his younger brother and the incumbent Lotte Group Chairman Shin Dong-bin, is attempting to interfere with Shin Dong-bin’s efforts to create a Korean holding company of the group.
According to law firm on July 18, Chairman Shin Dong-joo made a proposal at the planned shareholders meetings to be held on August 29, demanding Lotte Shopping, one of the four affiliates, be excluded from the governance revamp plan.
In April, the board of directors of the group's four key affiliates - Lotte Confectionery, Lotte Shopping, Lotte Chilsung Beverage and Lotte Food passed a plan to split each of them into investment and business entities, then to merge the investment entities together in order to create a central holding company. The decision is set to be approved by shareholders next month.
Shin said, “The current risks of Lotte Shopping's business in China were not properly reflected into the ratio of merger after divestiture. Establishing a holding company including Lotte Shopping amid high political and economic uncertainties is unreasonable management.” Shin is believed to be meant China's economic retaliation over the deployment of a U.S. missile defense system here.
Shin also added, “Spinning off and merging Lotte Shopping, which accounts for 80 percent of the total assets and sales of the four key affiliates seems to be part of a specific shareholder’s plan to secure the control of the group. The initial plan can cause a heavy financial burden.”