Lotte E&C calls off initial public offering

By Jungyoun Park

SEOUL, March 9 (Reuters) - South Korean builder Lotte Engineering & Construction has called off its initial public offering plan citing management changes, the Korea Exchange said on Monday.

Lotte E&C's decision comes at a time when global stock markets remain highly volatile due to the ongoing financial crisis and as South Korean construction firms struggle to deal with falling domestic apartment prices and diving demand.

A Korea Exchange official said the company requested permission to cancel its IPO last month and its approval was revoked on Feb. 23.

"There were some internal management changes after we decided to take over the construction unit of Lotte Engineering & Machinery in February this year. Those changes have forced us to cancel our IPO plan for now," Lotte E&C spokesman said.

"But our public offering plan has not been cancelled indefinitely. We may try again," he added.

The medium-sized builder, an affiliate of Lotte Group, had won the IPO approval from the Korea Exchange in June of 2008 but later delayed its public offering by six months as global stock markets plunged.

Lotte Hotel and Honam Petrochemical Corp (011170.KS) are major shareholders in the South Korean builder, controlling respectively about 43 percent and 33 percent of the firm.

Lotte E&C's decision puts POSCO Engineering & Construction under the spotlight, as the construction unit of steel giant POSCO (005490.KS) postponed its planned $1.1 billion initial public offering in September of last year.

"Stock markets today don't exactly offer the best condition for companies going public. Pricing is unlikely to be good at times like this, and Lotte's cancellation was more or less inevitable," said Heu Moon-wook, an analyst at Samsung Securities. (Editing by Marie-France Han and Lincoln Feast)