South Korea’s Ryukyung PSG Asset Management and retailer Lotte Shopping are facing legal action from entities that proposed to buy four Lotte Mart discount stores for some 550 billion won ($448.4 million) in 2019, according to industry sources on Tuesday.

The prospective buyers, real estate developer Moon Development Marketing and subsidiary the Korea Asset Investment Trust, filed a lawsuit in April against Ryukyung PSG -- a local asset management company that oversaw some 1.59 trillion won worth of assets as of Friday such as real estate, equities and derivatives -- seeking at least 500 million won in damages. The complaint was also filed against Lotte Shopping, which operates some 60 department stores and 130 discount stores.

MDM argued that Lotte Shopping was not eligible to exercise its right to buy back the commercial properties when it did so last year.

“We decided to file a complaint because of the discrepancy in the proposed buyer and the actual buyer,” an official from KAIT told The Korea Herald.

The MDM-led buyer group in September last year was selected as the preferred bidder to acquire four Lotte Mart discount stores across Korea from Ryukyung PSG.

The deal came four years after Ryukyung PSG bought the four stores -- one each in northern Seoul, southern Gyeonggi Province, North Jeolla Province and Busan -- in 2015 from Lotte Shopping for some 430 billion won. Under the terms of the sale, Lotte Shopping had the right to buy back the properties from Ryukyung PSG if the latter attempted to sell them.

Lotte Shopping exercised its right to acquire the assets after Ryukyung PSG and the MDM-led group embarked on talks about the transaction. Lotte Shopping did not participate in the earlier open bidding round.

The deal garnered attention in part because of redevelopment in one of the four stores, in Yongin, Gyeonggi Province. CBRE Korea and Avison Young Korea were bid managers.

Lotte Shopping proposed to buy the four assets at the same price that MDM had suggested. The 550 billion won deal was closed in November.

But according to the KAIT, Lotte Shopping was not actually the buyer. Instead, KB Asset Management and real estate developer Synergy One acquired the stores. Hence, Lotte Shopping did not meet the requirements to regain control of the properties.

Ryukyung PSG and Lotte Mart could not be immediately reached for comment.

By Son Ji-hyoung (consnow@heraldcorp.com)