[Funding] Lotte Europe Holdings Secures 100 Million Euro Refinancing for Hotel Lotte Support

[Asia Economy Reporter Lim Jeong-su] Lotte Hotel Europe Holdings (LOTTE HOTEL HOLDINGS EUROPE B.V.) secured funding worth 100 million euros (approximately 135 billion KRW) from the Shinhan Financial Group through a credit guarantee from its parent company, Hotel Lotte. The company repaid the loan borrowed from Hotel Lotte by borrowing market-rate funds at a relatively low interest rate.

According to the investment banking (IB) industry on the 28th, Lotte Hotel Europe Holdings recently borrowed 100 million euros in foreign currency funds from a special purpose company (SPC) organized under the lead of Shinhan Bank. The maturity is one year, with a lump-sum principal repayment scheduled for April next year. Shinhan Bank secured the loan funds by selling securitized notes backed by the loan principal and interest to institutional investors.

In this process, Hotel Lotte, the parent company of Lotte Hotel Europe Holdings, provided a capital replenishment agreement to the SPC. This means that if Lotte Hotel Europe Holdings faces difficulties in repaying the loan properly, making it hard to return the securitized note investment to institutional investors, Hotel Lotte will lend the SPC the shortfall. Shinhan Financial Investment signed a foreign exchange swap (CRS) contract with the SPC to bear the foreign exchange risk.

The procured funds were used to repay the existing loan that Lotte Hotel Europe Holdings had borrowed from Hotel Lotte. A Lotte Group official stated, "Lotte Hotel Europe Holdings borrowed funds at a low interest rate in the 1% range through a credit guarantee from Hotel Lotte and repaid the loan borrowed from Hotel Lotte."

Lotte Europe Holdings is a European regional holding company wholly owned by Hotel Lotte. It was established in the Netherlands in 2008 to oversee Lotte Group’s businesses in Russia, including hotels, department stores, confectionery, and European subsidiaries.

At that time, Lotte Group affiliates such as Hotel Lotte, Lotte Shopping, Lotte Confectionery, Lotte Chilsung Beverage, and Lotteria jointly invested, but after the launch of Lotte Holdings, Hotel Lotte bought all the shares held by affiliates to reorganize the governance structure and improve management efficiency.

Currently, it holds 100% stakes in Lotte Europe Investment, JSC Lotte Rus, and Lotte Hotel Saint Petersburg LLC, among others.

Although established as part of Lotte Group’s global expansion policy, its performance has continued to be sluggish since its inception. Recently, due to the impact of COVID-19 on the hotel business, it has not been able to escape a net loss position.

This content was produced with the assistance of AI translation services.