Park Han-sol reports on Korea's financial regulators, along with fintech and insurance. She previously wrote about the art world, from biennales and exhibitions to fairs and auctions, with a focus on Seoul and the figures shaping the scene. Before joining The Korea Times, she spent a year at ABC News' Seoul bureau, contributing to coverage of major Asia-Pacific events.
MBK, Meritz strike last-ditch deal to rescue Homeplus
A Homeplus store in Paju, Gyeonggi Province, remains closed with its entrance blocked by rows of shopping carts on Tuesday after the cash-strapped retailer temporarily shuttered stores, saying it could no longer cover basic operating expenses. Yonhap
By Park Han-sol
$135 mil. emergency loan revives retailer's path toward court-led rehabilitation
Homeplus, once Korea's second-largest discount store chain, secured a 200 billion won ($135 million) emergency loan, Thursday, giving itself a chance to revive its court-led rehabilitation after its largest creditor, Meritz Financial Group, approved the financing.
The decision came a day after private equity firm MBK Partners, Homeplus' owner, and its chairman, Michael ByungJu Kim, agreed to provide joint personal guarantees for the full amount of the debtor-in-possession loan.
The funding allows Homeplus to appeal the Seoul Bankruptcy Court's earlier decision to terminate its rehabilitation proceedings.
MBK Partners Chairman Michael ByungJu Kim / Newsis
The court ended the restructuring process on July 3, ruling that the company had failed to secure the minimum 200 billion won needed to carry out its turnaround plan. It nevertheless left the door open to reconsidering the case if the financing was secured before the July 20 appeal deadline.
The breakthrough follows months of deadlock between Meritz and MBK over the size of the loan and the guarantees required to secure it.
Meritz had previously agreed to lend up to 100 billion won, provided the loan was backed by personal guarantees from both MBK and Chairman Kim. It refused to provide the remaining 100 billion won unless the entire 200 billion won facility was fully guaranteed, citing concerns that extending the loan without sufficient security could expose the lender to legal liability if it later resulted in losses.
Members of the Homeplus' labor union hold a rally outside Meritz Financial Group's headquarters in Seoul, Thursday, after reports that the group and MBK Partners had tentatively agreed to provide a 200 billion won emergency loan to support the retailer's rehabilitation. Yonhap
The impasse was broken after MBK and Kim agreed to personally guarantee the full loan. MBK said the move was intended to "minimize losses for employees, suppliers, tenants and other stakeholders by giving Homeplus another opportunity to complete its restructuring."
The private equity firm added that resuming the rehabilitation process would help preserve Homeplus as a going concern while allowing it to restore normal operations and pursue a sale to a new investor.
Meritz Financial Group Chairman Cho Jung-ho / Yonhap
Industry officials said political pressure also helped push the negotiations across the finish line.
As concerns mounted over mass layoffs and the knock-on effects on thousands of suppliers if Homeplus were forced into liquidation, lawmakers from the ruling Democratic Party of Korea stepped up mediation efforts. The National Assembly scheduled a hearing on the Homeplus crisis for July 27.
Homeplus said the agreement represented more than just a short-term funding solution, arguing that it reflected growing alignment among key stakeholders behind the restructuring.
The retailer said support from its major creditors would significantly improve the chances of winning court approval for its rehabilitation plan, adding it will file an appeal with the court on Monday.