South Korea's Lotte Tour Development Co. has decided to book 568 billion won ($440 million) in valuation gains from its stake ownership of the land on Jeju Island in the first half of this year, which sharply reduces its debt ratio.
The gains reflect the value of the land, excluding the splash resort complex, Jeju Dream Tower, built on the land. Lotte's 59.1% ownership of the property had been previously valued at 104.7 billion won.
After paying taxes on the capital gains, the remaining 325.9 billion won will be booked as its equity capital. That will increase its capital by 4.5 times to 417 billion won while cutting its debt-to-equity ratio to 322% from 1,358%.
Also, if its remaining convertible bonds of 197.8 billion won are converted into equities, its capital will swell to 614.8 billion won, with the gearing ratio falling to 186%.
Analysts said that Lotte's stake in the property in the heart of the country's top tourist destination led to a drastic improvement in Lotte’s financial condition. The tourism company has owned the stake for over 40 year
The economic reopening is also expected to turn around Lotte Tour, which also operates Lotte Hotel Jeju, a resort hotel on the island.
Write to Dong-hui Park at
donghuip@hankyung.comYeonhee Kim edited this article
