South Korea's Hotel Lotte cuts size of jumbo IPO, delays listing to July

South Korea's Hotel Lotte Co Ltd on Tuesday cut the value of its planned IPO to a maximum 5.26 trillion won ($4.56 billion) and pushed its stock exchange listing to July, after prosecutors opened a bribery investigation into a director.

The hotelier announced the change in an amended listing prospectus filed a day after it postponed the June 6 start of an overseas investor roadshow. In the prospectus, Hotel Lotte said the bribery probe could harm its reputation and business.

Its initial public offering, previously set for later this month, could still be the world's largest this year even after the company lowered the maximum value from 5.74 trillion won.

Hotel Lotte said it now expects its shares to be priced 85,000 won to 110,000 won each, rather than 97,000 won to 120,000 won. That represents a cut in price of about 12 percent at the low end of the range and 8 percent at the high end.

The firm will set price on July 11, the prospectus showed.

The revised terms came after Seoul prosecutors on Thursday raided the offices of Hotel Lotte's duty free business as well as the home of Shin Young-ja, the daughter of the Lotte Group's founder and a Hotel Lotte director, in a bribery investigation.

Hotel Lotte said prosecutors are looking into whether Shin conspired with her son and the chief executive of an unidentified firm to receive bribes from local cosmetics company Nature Republic in exchange for Lotte Duty Free store space.

"Depending on the result, the investigation has the possibility to adversely affect the company's reputation and operations," Hotel Lotte said in the amended prospectus.

One banker involved in the IPO said it was too early to tell whether the bribery investigation could derail the process. At this point, the case appears to involve one of the company's directors, and not the company directly, the banker said, declining to be identified due to the sensitivity of the matter.

The Seoul Central District Prosecutors' office declined to comment on the investigation. A Nature Republic spokeswoman declined comment as prosecutors' investigations are ongoing.

On Monday, Lotte Duty Free said Shin, 73, stepped back from operations in 2012 and was not in position of influence. It also said Nature Republic products have been in its stores since 2010, before the alleged bribery had taken place.

Officials at the Lotte Foundation, which Shin chairs, could not immediately be reached for comment.

Through Lotte Duty Free, Hotel Lotte is the world's third-largest operator of duty free retail outlets - a business that accounted for 86 percent of its first-quarter revenue.

Hotel Lotte's IPO prospectus also showed that nearly two-thirds of its shares will be allocated for distribution by global brokerages with the remainder sold through local brokers.

$1 = 1,154.6500 won