E-Land forced to delay listing of retail unit
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Park Sung-su, E-Land Group chairman
By Lee Hyo-sik
E-Land Group has decided to push back its plan to take a retail unit public, as the local bourse operator remains reluctant to let the financially strapped company raise money on the capital market.
In addition to the dire financial health of the mid-tier fashion-and-retail business group, its controversial mistreatment of part-time workers has made the Korea Exchange (KRX) less willing to give the initial public offering (IPO) of E-Land Retail the green light.
“We had initially planned to list E-Land Retail on the local bourse in the first half of this year. But given unfavorable market conditions, we decided to delay the IPO plan by one year,” an E-Land Group official said. “E-Land Park, an affiliate of E-Land Retail, has become a liability ever since it came under criticism for not paying part-time workers. So we opted to first separate E-Land Park from E-Land Retail and start the IPO process over again.”
Last December, E-Land Park caused a public outcry for withholding about 8.4 billion won ($7.5 million) in wages from 44,400 part-timers working at its 20 restaurant chains, including Ashley and Pizza Mall. Since then, the KRX has been refusing to start the IPO review process for E-Land Retail.
E-Land Retail, which currently holds an 85.3 percent stake in E-Land Park, plans to sell the stake to E-Land World, the group’s holding firm, which has the remaining 14.7 percent stake.
“Once E-Land Park is separated from E-Land Retail, it will be a lot easier for us to receive approval from the KRX for taking E-Land Retail public,” the official said. “We will make all the necessary preparations so that company shares are traded on the local stock market early next year.”
Over the past year, E-Land has been trying to raise fresh funds to improve its deteriorating financial soundness.
It sold Teenie Weenie to Chinese fashion brand, V-GRASS, for 1 trillion won, and disposed of real estate. But to put an end to investors’ lingering concerns about its financial health, E-Land needs to list its shares of E-Land Retail and raise trillions of won in fresh capital.
The group has had its conflicts with Korea Investors Service, Korea Ratings and other credit ratings agencies, which either downgraded its credit ratings or threaten to do so, citing its shaky financial state.