Lotte Tour Development Co Ltd, promoter of the Jeju Dream Tower casino resort (pictured) on the South Korean holiday island Jeju, says it is in talks with “four to five” major South Korean financial institutions, about refinancing a nearly KRW700-billion (US$530.6-million) mortgage loan.
The aim would be to conclude the refinancing exercise by “late October” at maximum.
Lotte Tour’s auditor, Baker Tilly Woori, had stated in the Korea Exchange-listed group’s report for the financial year ending December 31 that “uncertainty exists in corporate viability”. This was due to current liabilities exceeding the group’s current assets by KRW966.2 billion, and Lotte Tour’s yearly net loss reaching KRW224.7 billion as of December 31, said the auditor.
According to the auditor, the trigger for the warning was an overlap between a maturity date relating to the mortgage loan, and those for a ‘put’ option for investors – active from September 20 this year to September 20, 2025 – giving them the right to sell, with respect to their investment in a US$60-million principal amount in foreign convertible bonds issued by Lotte Tour.
The current mortgage loan is said to be an obligation relating to construction costs for Jeju Dream Tower, which opened in December 2020, amid the Covid-19 pandemic.
