By Tony Munroe and Joyce Lee

SEOUL (Reuters) – South Korea’s Lotte Group, whose hotel unit faces a July deadline to complete an initial public offering (IPO) worth up to $4.5 billion, said on Sunday that it is “difficult” for it to modify the listing document.

The statement came two days after prosecutors raided the offices of Lotte Group and several companies in the conglomerate, including Hotel Lotte.

Three people with direct knowledge of the matter said the raids were part of an investigation into a possible slush fund, dealing a new blow to the hotel unit’s planned IPO, which could be the world’s biggest this year.

An investigator from the prosecution office carries boxes containing confiscated articles at Lotte Group’s headquarters in Seoul, South Korea, June 10, 2016. Choi Jae-gu/Yonhap via REUTERS

Earlier last week, Hotel Lotte cut the size of the IPO and pushed back the listing from June to July, in a revision to its listing document, after prosecutors launched a bribery investigation into a director.

“Carrying out procedures such as a modified filing to protect investors are currently physically difficult,” Lotte Group said in a statement on Sunday.

According to stock exchange rules, the deadline for Hotel Lotte to list is July 27, six months from the preliminary approval for the IPO. If it needed to refile its prospectus to warn investors about risks from Friday’s probe, which appeared likely, it would probably not be able to meet that deadline, an exchange official told Reuters on Friday.

“Hotel Lotte’s listing is a key issue to improve Lotte Group’s governance structure, including lowering Japanese shareholders’ stakes and diversifying shareholders, so we will closely discuss with advisors and regulators on what to do in the future,” Lotte Group said.

The Lotte Group, South Korea’s fifth-largest family run conglomerate, or chaebol, has grown from its founding in Japan 68 years ago as a maker of chewing gum.

But last year’s highly public power struggle within the founding Shin family fuelled resentment at the grip the chaebol hold over the Korean economy. Some Koreans also criticised the group’s close ties with former colonial ruler Japan.

Late on Friday, the group’s Lotte Chemical Corp unit said it withdrew from the bidding for U.S.-based Axiall Corp, which went to a rival suitor for $2.33 billion, citing “the difficult situation Lotte has faced in Korea recently and heated competition”.

(Reporting by Tony Munroe and Joyce Lee; Editing by Christian Schmollinger)

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