Homeplus, MBK, Meritz issue dueling statements

Homeplus, MBK urge Meritz to immediately provide 200 billion won

Meritz calls on MBK chief Kim Byung-ju to disclose assets

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

MBK Partners, the controlling shareholder of Homeplus, and Meritz Financial Group are clashing daily over a 200 billion won ($130 million) emergency debtor-in-possession loan for the struggling retailer. With a court having left open the possibility of excluding Homeplus from rehabilitation proceedings, both sides have entered a full-blown blame game.

Homeplus, MBK Partners and Meritz traded statements in rapid succession Wednesday, each taking aim at the others, according to industry sources.

Homeplus issued a joint statement with its general labor union warning that "bankruptcy will be difficult to avoid if emergency operating funds are not secured by June 30," and called on the government to intervene to prevent a collapse and ensure the 200 billion won emergency loan goes through.

The court had earlier ordered Homeplus to present a plan to raise 200 billion won by June 30. It also sent inquiries to the Homeplus creditors' committee, shareholders, labor unions and worker representatives regarding the possible exclusion from rehabilitation proceedings and the scrapping of the rehabilitation plan.

Homeplus and the general union said that since MBK Partners had expressed willingness to provide a 100 billion won joint guarantee, Meritz — as the largest creditor — should immediately step up with the full 200 billion won in emergency operating funds.

Homeplus and MBK have repeatedly said Meritz stands to be the biggest beneficiary in the event of bankruptcy. They claim that if Homeplus goes bankrupt, Meritz would recover the full principal and interest on a loan worth more than 1 trillion won, along with an additional 500 billion won in interest. Homeplus and the general union also delivered their joint statement to relevant government ministries, urging active support.

Meritz fired back immediately, saying responsibility for Homeplus's rehabilitation lies "not with the government or Meritz, but with MBK and Chairman Kim Byung-ju." Meritz said MBK and Kim — who manages assets worth 14 trillion won and runs a 50 trillion won fund — must explain why they cannot provide a 100 billion won guarantee. It added that MBK should stop hiding behind the institutional loopholes of the private equity fund system, stop shifting responsibility onto creditors, and disclose the financial status of its assets at home and abroad.

Meritz had earlier approved a loan of 100 billion won — half of the 200 billion won Homeplus requested — and deposited the funds into an escrow account. That 100 billion won corresponds to the amount MBK had previously guaranteed. Meritz set as a condition for disbursement not only a guarantee from MBK but also a personal guarantee from MBK Chairman Kim Byung-ju.

Meritz said Thursday that "the funds will be disbursed immediately once Chairman Kim and MBK provide their guarantees," urging them to "fulfill their minimum responsibilities as the controlling shareholder."

MBK rebuffed Meritz's statement, urging it to "stop the asset dispute based on inaccurate claims and instead disburse the 200 billion won in emergency operating funds needed for Homeplus's rehabilitation." MBK said the core issue is not the size of its assets under management or Chairman Kim's personal wealth, but "the rehabilitation of Homeplus, on which the livelihoods of some 10,000 employees, numerous business partners, suppliers and small merchants depend."

MBK added that Meritz "has secured a structure that would allow it to recover the full principal and earn more than 500 billion won in additional profit upon Homeplus's liquidation, yet it is not stepping up with the 200 billion won in operating funds needed for rehabilitation." It said "what is needed now is not another distorted asset dispute, but action toward rehabilitation."


soho0902@heraldcorp.com