Shin Dong-bin, chairman of Lotte Group, will sell part of his Lotte Shopping(023530) equity on the open market next month.
On the 22nd, Lotte Shopping disclosed that the chairman plans to sell 324,100 shares (1.15% of total shares outstanding). The sale will take place on the open market for about a month from Aug. 21 to Sept. 18. The intended sale price is 130,400 won per share, based on the closing price on the 21st, the day before the disclosure. The total sale is 42.26264 billion won.
If the transaction is completed as planned, the chairman's Lotte Shopping equity stake will fall to 9.08% from the current 10.23%. Lotte Shopping said the purpose of the sale is "to secure cash liquidity."
Major shareholders' equity sales are typically seen as an "overhang (large pending supply)" factor that weighs on share prices and a signal that dampens investor sentiment in the market. However, because the advance disclosure system makes the sale volume and period public in advance, some expect the actual price impact to be limited.
The disclosure is in line with the Financial Investment Services and Capital Markets Act, which requires executives or major shareholders of listed companies to report a trading plan 30 days before starting a transaction if they trade stocks amounting to at least 1% of total shares outstanding or 5 billion won. It was introduced to protect small shareholders from major shareholders' "surprise sales" using nonpublic information.