Support contingent on guarantees from MBK headquarters and Chairman Kim Byung-ju; conditions under review after meeting with Democratic Party lawmakers

A Homeplus store in Seoul. [Herald DB]
A Homeplus store in Seoul. [Herald DB]

Meritz Financial Group said it is considering providing 100 billion won ($65.7 million) in emergency debtor-in-possession financing to help normalize Homeplus's management and support its stable operations — but only if MBK Partners' headquarters and its controlling shareholder, Chairman Kim Byung-ju, provide guarantees.

Meritz Securities said Thursday that after meeting that afternoon with Democratic Party of Korea lawmakers — including Yoo Dong-su, Min Byung-deok, Kim Nam-geun and Lee Gang-il — it is working to confirm the specific guarantee conditions required to extend the financial support the lawmakers had requested.

The guarantees from MBK headquarters and Chairman Kim are considered necessary due to legal constraints under the recently amended Commercial Act, including the duty of loyalty to shareholders.

Meritz had initially said it could not provide the 100 billion won because of legal requirements including the duty of loyalty and the duty of care to shareholders. It now believes support within that range is feasible given MBK and Chairman Kim's creditworthiness, and is working to determine the specific guarantee terms MBK would offer.

The review was prompted by a desire to support Homeplus's essential business activities, including securing employment stability for its workers and easing the payment burden on suppliers facing cash shortages.

"We recognize that protecting the many stakeholders of Homeplus — its employees and business partners — is an important social responsibility of a financial institution," a Meritz Financial Group official said. "If MBK headquarters and Chairman Kim provide guarantees, we will extend the support."

Meritz is Homeplus's largest creditor. Homeplus filed for court receivership in March last year to undergo restructuring and has been under the process for more than a year. The retailer is reported to need 200 billion won in emergency operating funds to sustain purchasing and supplier payments and to pursue mergers and acquisitions of its remaining business units.


th5@heraldcorp.com