Hotel Lotte joins bid for Bobath Hospital foundation to eye aging society

Hotel Lotte Co., a hotel unit of South Korea’s large conglomerate Lotte Group, has joined the bid for Nuelproon Medical Foundation that runs Bobath Memorial Hospital, sanatorium in Budang in the outskirts of Seoul.

Cash-rich Lotte has emerged as a winning candidate in the bid that drew a number of strategic investors including Korea Yakult Co., Hoban Construction Co. and Bumin Hospital.

According to the investment banking industry on Tuesday, Hotel Lotte participated in the preliminary auction for the foundation, which closed on September 22. The company is expected to hand in the final bid due on Thursday.

Lotte Group reportedly has been examining ways to venture into the business of running medical facility for the elderly for several years under the order of Lotte Group founder Shin Kyuk-ho.

As it is a non-profit organization, bidders would have to raise funds through loans or others and first pay off the foundation’s outstanding debt. The rest of the funds would go into the hospital. The winning bidder would have the right to name the board and de facto management control.

As of late last year, the medical foundation had 101.3 billion won ($90 million) in assets, of which 84.2 billion won is debt. The bidders would have to offer at least 90 billion won to pay off the debt. Industry watchers predict the hospital could fetch up to 120 billion won given its reputation of its facility and faculty.

“Many candidates have eyed the hospital because the hospital makes steady sales of more than 40 billion won and Earnings Before Interests, Taxes, Depreciation and Amortization (EBITDA) of 6 to 7 billion won every year,” said an official of the investment banking industry. Bobath Memorial Hospital posted 4.5 billion won in operating profit and 43.5 billion won in sales last year.

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