Key Points
MBK Partners commits personal funds to support small business suppliers
Homeplus enters court-led rehabilitation after credit rating drop
Company aims to submit self-rescue plan by June 3
Chairman Kim Byung-ju offers financial assistance
Earlier this month, Homeplus filed for corporate rehabilitation with the Seoul Bankruptcy Court after two local credit rating agencies lowered the rating of its corporate bonds to A3- from A3, citing the retailer's lack of efforts to improve its financial health, reports Yonhap news agency.
"We will fulfill our social responsibility regarding Homeplus' rehabilitation process," MBK Partners said in a release. "As part of efforts, Chairman Kim Byung-ju will provide financial support to ensure prompt payments for transactions with small businesses, which are expected to face difficulties." MBK Partners did not elaborate on Kim's financial support.
MBK has 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.
On Friday, Homeplus President Joh Joo-yun apologized to its partners and investors and pledged to do its best to normalize the company as soon as possible.
Joh stressed Homeplus remains financially stable, saying the company had paid 340 billion won (US$234 million) in commercial receivables as of Thursday and holds 160 billion won in cash. She vowed to make a full payment of the remaining debt to avoid any damage involving the rehabilitation process.
Homeplus said it will submit its self-rescue plans to the court by June 3.
The Financial Supervisory Service (FSS) has vowed to look into whether there were any flaws in the process of Homeplus selling its asset-backed short-term debts (ABSTBs).
Late last month, Homeplus issued ABSTBs worth 82 billion won through Shinyoung Securities Co. Since then, a controversy has erupted over whether it sold such debts even after knowing the possibility of its credit rating being downgraded.
In 2015, MBK Partners acquired a 100 percent stake in Homeplus for 7.2 trillion won, including 4.3 trillion won in loans, from British retailer Tesco Plc.
