MBK sold to The Siena Group after talks collapsed
'We never walked away — trust was broken,' Golfzon Holdings says
Golf course leases, acquisition rights also in dispute
A dispute between MBK Partners, the largest shareholder of Golfzon County, and second-largest shareholder Golfzon Holdings over the sale of the golf course operator is intensifying. Golfzon Holdings said MBK had agreed to sell its Golfzon County stake to the company but unilaterally broke off negotiations the day before the contract was to be signed, and warned of legal action.
On Wednesday, Golfzon Holdings issued a statement rebuffing MBK's claim that the sale process was conducted properly, expressed regret over MBK's characterization of its objections as "false and distorted" and "groundless," and urged MBK to address the allegations raised during the sale negotiations.
The conflict erupted after MBK signed a share purchase agreement on Oct. 27 to sell a 100 percent stake in Golfzon County to a consortium comprising The Siena Group and CL Asset Management. The deal values Golfzon County at about 1.8 trillion won ($1.34 billion), including debt.
MBK invested in Golfzon County in 2018 and became its largest shareholder. MBK holds a 58.37 percent stake and Golfzon Holdings holds 41.63 percent; if all convertible preferred shares are converted to common stock, the stakes adjust to 68.4 percent and 31.6 percent, respectively. MBK has said it intends to invoke a drag-along right under the shareholders' agreement to force the sale of Golfzon Holdings' stake alongside its own.
According to Golfzon Holdings, the two sides had agreed on Oct. 26 to sign a contract under which MBK would sell its stake to Golfzon Holdings. Golfzon Holdings said it had also moved up the planned closing date from January next year to Dec. 31 this year at MBK's request.
However, Golfzon Holdings said MBK notified it on Oct. 25 — the day before the scheduled signing — that the deal could not proceed. Golfzon Holdings criticized MBK for negotiating with other acquisition candidates while presenting Golfzon Holdings as the sole party in talks, saying MBK had betrayed eight years of trust.
MBK, for its part, said it had given Golfzon Holdings the first opportunity to acquire the stake but received no offer at the time, and that the final acquisition terms Golfzon Holdings later proposed were less favorable than those offered by The Siena Group.
Golfzon Holdings said its right of first offer differs from a right of first refusal, which would have allowed it to match a third party's terms. It said MBK's claim that it had passed on the acquisition opportunity was untrue, given that it had actively participated in negotiations.
The lease agreements on the golf courses are also in dispute. Golfzon Holdings said it has been leasing four of its golf courses to Golfzon County at low rents with no deposit, and that repeated requests to revise the lease terms had been rejected. MBK said the contracts were lawfully concluded under a 2018 agreement between the two sides.
The two sides also disagree over responsibility for the failed initial public offering. Golfzon Holdings criticized MBK for showing little interest in a listing while pursuing a sale since 2023. MBK said the shareholders' agreement explicitly allowed for a third-party sale if an IPO fell through.
Golfzon Holdings said it is reviewing whether contractual procedures and good-faith obligations were observed in the exercise of the drag-along right, and warned of legal action over the breakdown of negotiations, the lease agreements and the share sale process.
yjc@heraldcorp.com
