Lotte Tour announces rights offer to cover Jeju project costs
South Korean casino investor Lotte Tour Development Co Ltd announced on Friday a KRW240-billion (US$212.9-million) rights offering to finance costs related with its under-construction foreigner-only casino project on Jeju Island, South Korea.
The firm said in a press release that existing company shareholders would be given priority in subscribing to the rights offering. Rights unsubscribed by the existing shareholders would be offered to the general public for subscription. The operation is to be completed by the second half of October.
Mirae Asset Daewoo Co Ltd was presented as the sole lead manager and bookrunner of the operation.
The rights offer would allow Lotte Tour to “finance major development costs” up to the opening of the Jeju project, known as Jeju Dream Tower. Lotte Tour is co-developing the scheme in partnership with Chinese state-owned developer Greenland Group.
The South Korean firm said it planned to use the funds raised by the rights offer to cover scheduled mid-payments to Greenland Group, related with Lotte Tour’s 59-percent stake in the project, as per a 2014 agreement between the two sides. Such mid-payments, totalling KRW150 billion, are due respectively one year and six months prior to Jeju Dream Tower’s opening, according to Lotte Tour. Jeju Dream Tower is scheduled to open by October 2019.
The capital raised via the rights offer would also be used for interior design and operational costs, said Lotte Tour.
Lotte Tour is involved in the provision of leisure and travel services. The firm is independent from Lotte Group, one of the South Korea’s largest conglomerates.
Construction of Jeju Dream Tower started in May 2016. The tower is poised to become the tallest building in Jeju, with 38 floors. It will include a Grand Hyatt-branded hotel, and offer casino services, according to its promoters.
Lotte Tour had earlier said it had raised KRW40 billion toward the under-construction scheme by issuing convertible bonds via a third-party placement.
According to Friday’s press release, Lotte Tour “owns and will operate 59 percent of total [gross floor area of Jeju Dream Tower], which includes 750 hotel rooms, 11 restaurants and bars, shopping malls, observation deck, hotel amenities, casino entertainment facility, etc.”
The remaining area of the property will feature a “hotel residence of 850 rooms” developed by Greenland Group. Friday’s release stated that more than 80 percent of the hotel residence units were already sold.
Lotte Tour announced on July 27 an agreement to acquire the entire capital of Paradise Jeju Lotte Casino for KRW15 billion. The casino venue is currently operated by Paradise Co Ltd and is located in Hotel Lotte Jeju. Lawrence Teo, Lotte Tour’s executive vice president and chief operating officer, told GGRAsia on Tuesday that the company was considering a transfer of the gaming licence from Paradise Jeju Lotte Casino to Jeju Dream Tower once the latter property is inaugurated.
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