By Lee Hyo-sik
The succession feud at Lotte Group took an unexpected turn Wednesday when Shin Dong-joo, the eldest son of group founder Kyuk-ho, dismissed his younger brother and Lotte Group Chairman Dong-bin from a paper company that holds a majority stake in Lotte Holdings in Japan.
Kwang Yoon Sa, which holds a 28.1 percent stake in Lotte Holdings, held board of directors and shareholders' meetings to strip Dong-bin of his board seat. The paper company appointed Dong-joo as the new CEO, replacing Kyuk-ho.
Dong-joo holds a 50 percent stake plus one share in Kwang Yoon Sa.
However, Lotte Group headed by Dong-bin downplayed the incident, arguing that the dismissal does not affect the chairman's control of the group. It said that except for Kwang Yoon Sa, company employees and other shareholders of Lotte Holdings support Dong-bin as leader of the group's operations both in Korea and Japan.
Chung Hye-won, a managing director of SDJ Corp. established by Dong-joo, said the former vice chairman of Lotte Holdings had seized control of Kwang Yoon Sa.
"I also hold a 1.62 percent stake in the holding firm. As the majority shareholder of Lotte Holdings, I will correct the wrongs," Chung said on behalf of Dong-joo who is not fluent in Korean.
Dong-bin's dismissal from Kwang Yoon Sa was the first counteroffensive engineered by Dong-joo, who has vowed to take all possible measures to reclaim the group leadership.
He has been insisting that Dong-bin appointed himself arbitrarily as CEO of Lotte Holdings and other entities without due legal process. On Oct. 9, Dong-joo told reporters that he will take legal action against his younger brother both in Japan and Korea.
According to Lotte Group, Kwang Woon Sa holds a 28.1 percent stake in Lotte Holdings, while company employees have 27.8 percent.
Group affiliates, the Shin family, members of the board of directors and other corporate shareholders hold the remaining stakes. Dong-bin has 1.4 percent.
Lotte Holdings had a 19.07 percent stake in Lotte Hotel, the de facto holding firm of Lotte Group in Korea.
L-investment firms in Japan owned by the holding firm have a combined 72.65 percent stake in the hotel, meaning that whoever controls Lotte Holdings can seize the full control of Lotte Group in both Korea and Japan.
Lotte Group said Wednesday that Dong-bin's dismissal does not affect his managerial control, stressing that Kwang Yoon Sa is not a holding firm, but a paper company owned by Shin family members, which holds a fraction of a stake in Lotte Holdings.
"The company has only 28.1 percent in the holding firm. As proved at a Lotte Holdings' shareholders' meeting on Aug. 17, the majority of Lotte Holdings shareholders support the Lotte chairman as the CEO," a group official said. "The chairman will continue to manage the group's operations in both countries."
However, the balance of power could tilt toward Dong-joo if company employees, who hold a 27.8 percent stake in the holding firm, decided to side with him.
Dong-joo has been saying that if employee shareholders vote in favor of him, he can regain the control of the holding firm.
SDJ Corp. said it will mobilize all resources to persuade employee shareholders to support Dong-joo.
.jpg/dims/resize/740/optimize) |
| Shin Dong-joo |
Kwang Yoon Sa, which holds a 28.1 percent stake in Lotte Holdings, held board of directors and shareholders' meetings to strip Dong-bin of his board seat. The paper company appointed Dong-joo as the new CEO, replacing Kyuk-ho.
Dong-joo holds a 50 percent stake plus one share in Kwang Yoon Sa.
However, Lotte Group headed by Dong-bin downplayed the incident, arguing that the dismissal does not affect the chairman's control of the group. It said that except for Kwang Yoon Sa, company employees and other shareholders of Lotte Holdings support Dong-bin as leader of the group's operations both in Korea and Japan.
Chung Hye-won, a managing director of SDJ Corp. established by Dong-joo, said the former vice chairman of Lotte Holdings had seized control of Kwang Yoon Sa.
"I also hold a 1.62 percent stake in the holding firm. As the majority shareholder of Lotte Holdings, I will correct the wrongs," Chung said on behalf of Dong-joo who is not fluent in Korean.
Dong-bin's dismissal from Kwang Yoon Sa was the first counteroffensive engineered by Dong-joo, who has vowed to take all possible measures to reclaim the group leadership.
He has been insisting that Dong-bin appointed himself arbitrarily as CEO of Lotte Holdings and other entities without due legal process. On Oct. 9, Dong-joo told reporters that he will take legal action against his younger brother both in Japan and Korea.
According to Lotte Group, Kwang Woon Sa holds a 28.1 percent stake in Lotte Holdings, while company employees have 27.8 percent.
Group affiliates, the Shin family, members of the board of directors and other corporate shareholders hold the remaining stakes. Dong-bin has 1.4 percent.
Lotte Holdings had a 19.07 percent stake in Lotte Hotel, the de facto holding firm of Lotte Group in Korea.
L-investment firms in Japan owned by the holding firm have a combined 72.65 percent stake in the hotel, meaning that whoever controls Lotte Holdings can seize the full control of Lotte Group in both Korea and Japan.
Lotte Group said Wednesday that Dong-bin's dismissal does not affect his managerial control, stressing that Kwang Yoon Sa is not a holding firm, but a paper company owned by Shin family members, which holds a fraction of a stake in Lotte Holdings.
"The company has only 28.1 percent in the holding firm. As proved at a Lotte Holdings' shareholders' meeting on Aug. 17, the majority of Lotte Holdings shareholders support the Lotte chairman as the CEO," a group official said. "The chairman will continue to manage the group's operations in both countries."
However, the balance of power could tilt toward Dong-joo if company employees, who hold a 27.8 percent stake in the holding firm, decided to side with him.
Dong-joo has been saying that if employee shareholders vote in favor of him, he can regain the control of the holding firm.
SDJ Corp. said it will mobilize all resources to persuade employee shareholders to support Dong-joo.
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