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Lotte Tour-court receivership

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(Globalpost/GlobalPost)

SEOUL, March 18 (Yonhap) -- Lotte Tour Co., a South Korean tour operator, said Monday it has filed for court receivership as part of its efforts to get back on its feet following the default of a company in which Lotte has a stake.

Lotte Tour said in a regulatory filing that the Seoul Central District Court is scheduled to decide whether to approve its request, though it did not give any specific time frame.

Court officials were not immediately reached for comment.

The move came five days after Yongsan Development Co., the asset manager of Dreamhub Project Financing Vehicle Co., failed to pay back 5.2 billion won (US$4.6 million) in interest on its asset-backed commercial paper.

Lotte has a 15.1 percent stake in Dreamhub Project Financing Vehicle, a special purpose company created for the 31 trillion won project designed to transform Yongsan, located in the heart of Seoul, into an international business hub by 2016.

A Lotte official said his company invested about 170 billion won in the Yongsan development project.

Lotte Tour's aggregate capital stood at 50.8 billion won as of December last year, compared with its debts worth 131.4 billion won.

The Korea Exchange, the country's stock market operator, said it has suspended trading of Lotte Tour, and plans to begin a process to delist the company.

Lotte posted a net loss of 36.2 billion won last year, compared with a net loss of 10.6 billion won in 2011, according to the data released by the financial watchdog's online regulatory filing system.

Lotte Tour, founded in 1971, has nothing to do with retail giant Lotte Group, South Korea's fifth-largest family-controlled conglomerate whose businesses range from department stores and discount stores to hotels and fast food restaurants as well as construction services.

On Friday, Chung Chang-young, chief executive officer of Korea Railroad Corp., the biggest shareholder of Dreamhub Project Financing Vehicle Co. with a 25 percent interest, said he was willing to offer 260 billion won in emergency funds to salvage the country's largest urban development project should investors accept a package of measures to normalize it.

The railroad operator said the project will go ahead again if its offer is approved on April 2, but warned that the project will collapse if the 29 companies spurn the offer.

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