Watchdog vetting MBK Partners over Homeplus fiasco
Lee Bok-hyun, governor of the Financial Supervisory Service, speaks during a press conference in Seoul, March 19. Yonhap
The chief of Korea's financial watchdog said Wednesday his agency will inspect MBK Partners to look into whether there have been any flaws in the process of the private equity fund-controlled retailer Homeplus's short-term debt sale and its filing for court rehabilitation.
It is rare for a private equity fund to be vetted by the financial watchdog over a specific case.
"Our agency has started an inspection into MBK Partners to verify speculations related to Homeplus," Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), said in a press conference.
Lee called on MBK Partners to cooperate in the FSS' inspection.
The FSS' move came as speculation grew over Homeplus's short-term debt sale.
On March 4, Homeplus entered court-led rehabilitation proceedings after two rating appraisers lowered the rating of its corporate bonds to A3- from A3, citing the company's lack of efforts to improve its financial health.
Although Homeplus was notified by a credit rating agency on Feb. 25 that its rating was likely to decline, the company issued asset-backed short-term bonds (ABSTBs) worth 82 billion won ($56.3 million) through Shinyoung Securities the same day.
The FSS has been investigating the two rating agencies and Shinyoung Securities over whether the securities firm had sold the bonds while already being aware of Homeplus' imminent credit rating downgrade.
Earlier, MBK Partners said its chair, Kim Byung-ju, will use his personal assets to support suppliers of the major discount store chain affected by the court-led rehabilitation process.
MBK has also come under criticism for placing Homeplus into rehabilitation without making self-recovery efforts, though its massive acquisition debt has led to the retailer's financial difficulties. (Yonhap)