MBK chief tries damage control amid Homeplus setback
MBK Partners, under pressure from the Homeplus debacle and a contentious management battle over Korea Zinc, sought to downplay the severity of the situation in its annual letter to investors, according to industry sources on Wednesday.
Each year, MBK Partners Chairman Michael Byung-ju Kim sends a letter to the firm's limited partners, highlighting key achievements and investment strategies. This year's letter was distributed on March 24.
'Homeplus, one of our oldest and largest investments, filed for rehabilitation proceedings in early March,' Kim acknowledged in the letter, explaining that the move was prompted by a liquidity crunch following the retailer's credit rating downgrades.
'It is worth noting that under rehabilitation protection, MBK Partners will remain in control of operations as we seek to salvage meaningful value from our equity interest,' he added.
The private equity giant has found itself in a difficult position amid criticism over the rehabilitation of the troubled hypermarket chain, with detractors accusing the firm of shirking responsibility in the face of the bankruptcy.
Adding to the controversy, Korea's top financial regulator, the Financial Supervisory Service, announced Tuesday that it had uncovered 'circumstantial evidence' suggesting MBK was involved in issuing short-term bonds for Homeplus while simultaneously preparing for its rehabilitation behind the scenes.
However, Kim appeared to brush aside the mounting scrutiny, characterizing the situation as 'some noise' in the media.
'We are committed to the welfare of all stakeholders, and we have announced measures to take 'societal responsibility,' including personal contributions,' he wrote, referencing his pledge to use personal assets to help resolve the crisis.
In the letter, Kim also addressed the firm's attempt to acquire Korea Zinc, the world's largest zinc smelter based in Korea.
'What is frequently overlooked is that the transaction is about governance reform, which aligns with the government's CVP (Corporate Value-Up Program) initiative,' he wrote.
Although MBK challenged Korea Zinc Chair Choi Yun-beom's management rights in a proxy battle — teaming up with the smelter's major shareholder and former ally turned rival, Young Poong — Choi ultimately retained control of the company.
Choi secured approval for key agenda items at the company's general shareholders' meeting held on March 28. MBK and Young Poong have since announced plans to legally challenge the outcome.
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