Firm Says Court-Appointed Administrator Oversees Proceedings, Issues Statement on May 15
MBK Partners CI
MBK Partners has issued an official statement and moved to directly counter various allegations surrounding Homeplus’ rehabilitation proceedings. The private equity firm appeared to be trying to calm the controversy by rebutting, with fact-based arguments, criticism in some quarters that it had been running the company in a leading role while focusing only on recovering its investment.
In a statement released on May 15, MBK Partners made clear that the current Homeplus rehabilitation proceedings are being conducted under the strict management and supervision of the rehabilitation court in accordance with the Debtor Rehabilitation and Bankruptcy Act. It said claims that MBK is making decisions independently or leading operations run contrary to the actual legal structure.
In general, once rehabilitation proceedings begin, company operations and the drafting of a rehabilitation plan are carried out mainly by an administrator appointed by the court. Because major decisions must go through consultations with interested parties including creditors and receive the court’s final approval, the structure effectively makes unilateral management by any specific largest shareholder impossible.
The firm also drew a hard line in a forceful tone over the most sensitive issue, the controversy over investment recovery. MBK cited as grounds the fact that, since the start of the rehabilitation proceedings, it has treated the entire 2.5 trillion won ($1.82 billion) it had previously invested as a gratuitous retirement.
An MBK Partners official said, “Not a single won of investment has been recovered to date,” adding, “Rather, we are supporting the company’s normalization by giving up a massive investment.” The remarks were seen as intended to dispel market misunderstandings that it was recovering its investment through asset sales.
MBK also stressed that the recently controversial push to sell Homeplus Express was a strategic choice aimed at increasing the chances of rehabilitation. Its argument is that the transaction is not an asset recovery move for the benefit of a particular investor, but a structural reform measure being pursued as part of the rehabilitation proceedings.
According to MBK, the sale proceeds it is expected to receive from NS Shopping are about 120.0 billion won ($87.36 million). However, with the total enterprise value, including liabilities in the Express business division, estimated at about 300.0 billion won ($218.40 million), the firm expects the sale to provide meaningful help in improving the financial structure.
Hur Sung-soo
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