Lotte Tour Development will move to reassess its corporate value by clearing 700 billion won in accumulated deficits and pursuing shareholder-friendly amendments to its articles of incorporation. It plans to sharply reduce accumulated deficits by converting capital surplus into retained earnings and to lay the groundwork for resuming dividends, which had been halted for a long period, by newly establishing a basis for interim dividends in the articles.
Lotte Tour Development said in a disclosure on the 12th that, as of the end of the fourth quarter last year, it decided to cover deficits by converting 590.7 billion won—including share premium and legal reserve—out of 680.9 billion won in capital surplus into retained earnings.
With the addition of a 110.9 billion won cash dividends to be carried out by casino subsidiary LT Entertainment, Lotte Tour Development's deficits are expected to fall to 522.5 billion won, down 701.7 billion won from 1.2242 trillion won at the end of last year.
The company plans to put the related agenda items to a vote at the regular shareholders meeting on the 27th. Under the Commercial Act, if the aggregates of capital reserves and legal reserves exceed 1.5 times the capital, a reduction within the excess range is possible with a shareholders meeting resolution.
At this shareholders meeting, Lotte Tour Development will also establish an interim dividends clause by amending the articles alongside improving its financial structure. If profits occur going forward, it is seen as an intention to return value to shareholders in a timely manner rather than limiting itself to an annual settlement of account dividends.
In the meantime, Lotte Tour Development accumulated large deficits in the process of investing about 1.6 trillion won to develop the Jeju Dream Tower integrated resort. Lotte Tour Development's net losses were 200.7 billion won in 2021, 224.7 billion won in 2022, 202.3 billion won in 2023, and 116.6 billion won in 2024, totaling 744.3 billion won over the past four years. Over the same period, finance expense from borrowings also came to around 100 billion won each year.
However, the company's results have been improving rapidly since last year on the back of strong casino operations. Last year, LT Entertainment, a casino subsidiary 100% owned by Lotte Tour Development, posted 476.7 billion won in revenue, up 61.8% from a year earlier, and 174.2 billion won in operating profit, up 128.6%. LT Entertainment plans to finalize a 110.9 billion won cash dividends plan after a shareholders meeting on the 25th of this month. The dividends will flow into Lotte Tour Development and be used to reduce deficits.
Lotte Tour Development's consolidation results are also improving rapidly. Lotte Tour Development recorded 653.4 billion won in revenue and 143.3 billion won in operating profit last year. Those figures rose 38.6% and 267.4%, respectively, from a year earlier. Net profit also turned to a surplus at 27.6 billion won.
A Lotte Tour Development official said, "This step is a full-fledged move to overcome past difficulties and leap forward as a solid, sound corporations," adding, "With the stable profit-generating capacity of the casino and resort businesses proven, we will actively respond to shareholder value enhancement policies, including the government's corporate value-up program."