Latest news with #KimKwang-il
Miami Herald
09-07-2025
- Business
- Miami Herald
MBK Partners urged to repay debts owed to individual investors
SEOUL, July 9 (UPI) -- A lawyer whose firm is suing MBK Partners over investor losses has urged the financial company to repay debts owed to those who purchased asset-backed bonds related to Home Plus, South Korea's troubled discount chain. LawVax attorney Jang Jin-seok stated that position during an interview with UPI on Tuesday. The Seoul-based law firm filed a criminal complaint with the prosecutors late last month against senior executives of MBK and Home Plus. Included in them were MBK Chairman Michael Byungju Kim and Home Plus co-CEOs Kim Kwang-il and Joh Joo-yun. The complaint alleges that they issued or helped issue commercial papers and asset-backed, short-term bonds knowing that Home Plus lacked the capacity to repay them, causing investors to lose about $400 million. "Due to mounting losses and deteriorating credit ratings, Home Plus relied on short-term funding to stay afloat, and toward that end, it devised unique asset-based bonds, which attracted individual investors," Jang said. "And all of a sudden, Home Plus filed for corporate rehabilitation in early March, just after its credit ratings downgrade. This indicates that the retail chain had no intention of repaying its debts. At the very least, MBK and Home Plus must address this issue," he said. Home Plus refuted Jang's claims. "Home Plus made every effort to turn the business around to the last minute, as shown by its attempts to reduce debt ratios," a company spokesperson said in a phone interview. "However, these efforts were not fully effective, as the virus pandemic and the rise of e-commerce continued to negatively impact our business," he said. Home Plus noted that its debt ratio improved to 462% as of this January, compared to 1,506% in the same period of 2024. MBK acquired Home Plus from Tesco in 2015 for $5.1 billion. However, the company has been in steady decline, particularly since 2021, posting consecutive annual losses. Its operations suffered due to the COVID-19 pandemic and the rapid rise of online retailers like Coupang, which eroded its traditional brick-and-mortar business model. On Feb. 28, South Korea's credit rating agencies downgraded Home Plus's corporate rating from A3 to A3-. Four days later, it filed for corporate rehabilitation with the Seoul Bankruptcy Court. "It seems that MBK gave up Home Plus last year and dispatched Kim Kwang-il to the company to oversee its exit strategy," Jang said. "And the credit ratings cut may have convinced MBK and Home Plus that short-term funding was no longer viable, so they chose to walk away without caring about the debts owed to individual investors." Kim Kwang-il was appointed co-CEO of Home Plus early last year to lead the corporation with Joh Joo-yun, former chief of McDonald's Korea. Jang criticized Kim for taking on too many roles, noting that he reportedly serves multiple positions for 18 companies, mostly MBK affiliates like Home Plus and Lotte Card. In regard to a potential sale of Home Plus, Jang also was skeptical. MBK is seeking to avoid liquidation by selling the retailer. To do so, the outfit pledged to write off its entire stake in Home Plus worth $1.8 billion. "MBK now claims that Home Plus is an attractive opportunity after cancelling $1.8 billion stake," Jang said. "If that is true, why doesn't MBK take over operations of Home Plus again? In case MBK can revive the supermarket chain, it does not have to give up its stake on Home Plus." In response, Home Plus said that the attempt to sell the company is aimed at saving nearly 20,000 employees, along with numerous suppliers and stakeholders. It added that MBK has made significant sacrifices to support this. Copyright 2025 UPI News Corporation. All Rights Reserved.
UPI
09-07-2025
- Business
- UPI
MBK Partners urged to repay debts owed to individual investors
A criminal complaint filed with South Korean prosecutors alleged that MBK Partners issued or helped issue commercial papers and asset-backed, short-term bonds knowing that Home Plus lacked the capacity to repay them, causing investors to lose about $400 million. File Photo by Jeon Heon-Kyun/EPA SEOUL, July 9 (UPI) -- A lawyer whose firm is suing MBK Partners over investor losses has urged the financial company to repay debts owed to those who purchased asset-backed bonds related to Home Plus, South Korea's troubled discount chain. LawVax attorney Jang Jin-seok stated that position during an interview with UPI on Tuesday. The Seoul-based law firm filed a criminal complaint with the prosecutors late last month against senior executives of MBK and Home Plus. Included in them were MBK Chairman Michael Byungju Kim and Home Plus co-CEOs Kim Kwang-il and Joh Joo-yun. The complaint alleges that they issued or helped issue commercial papers and asset-backed, short-term bonds knowing that Home Plus lacked the capacity to repay them, causing investors to lose about $400 million. "Due to mounting losses and deteriorating credit ratings, Home Plus relied on short-term funding to stay afloat, and toward that end, it devised unique asset-based bonds, which attracted individual investors," Jang said. "And all of a sudden, Home Plus filed for corporate rehabilitation in early March, just after its credit ratings downgrade. This indicates that the retail chain had no intention of repaying its debts. At the very least, MBK and Home Plus must address this issue," he said. Home Plus refuted Jang's claims. "Home Plus made every effort to turn the business around to the last minute, as shown by its attempts to reduce debt ratios," a company spokesperson said in a phone interview. "However, these efforts were not fully effective, as the virus pandemic and the rise of e-commerce continued to negatively impact our business," he said. Home Plus noted that its debt ratio improved to 462% as of this January, compared to 1,506% in the same period of 2024. MBK acquired Home Plus from Tesco in 2015 for $5.1 billion. However, the company has been in steady decline, particularly since 2021, posting consecutive annual losses. Its operations suffered due to the COVID-19 pandemic and the rapid rise of online retailers like Coupang, which eroded its traditional brick-and-mortar business model. On Feb. 28, South Korea's credit rating agencies downgraded Home Plus's corporate rating from A3 to A3-. Four days later, it filed for corporate rehabilitation with the Seoul Bankruptcy Court. "It seems that MBK gave up Home Plus last year and dispatched Kim Kwang-il to the company to oversee its exit strategy," Jang said. "And the credit ratings cut may have convinced MBK and Home Plus that short-term funding was no longer viable, so they chose to walk away without caring about the debts owed to individual investors." Kim Kwang-il was appointed co-CEO of Home Plus early last year to lead the corporation with Joh Joo-yun, former chief of McDonald's Korea. Jang criticized Kim for taking on too many roles, noting that he reportedly serves multiple positions for 18 companies, mostly MBK affiliates like Home Plus and Lotte Card. In regard to a potential sale of Home Plus, Jang also was skeptical. MBK is seeking to avoid liquidation by selling the retailer. To do so, the outfit pledged to write off its entire stake in Home Plus worth $1.8 billion. "MBK now claims that Home Plus is an attractive opportunity after cancelling $1.8 billion stake," Jang said. "If that is true, why doesn't MBK take over operations of Home Plus again? In case MBK can revive the supermarket chain, it does not have to give up its stake on Home Plus." In response, Home Plus said that the attempt to sell the company is aimed at saving nearly 20,000 employees, along with numerous suppliers and stakeholders. It added that MBK has made significant sacrifices to support this.
Korea Herald
28-04-2025
- Business
- Korea Herald
Homeplus, MBK Partners HQs raided over controversial short-term debt sale
Prosecutors carried out a search and seizure operation at the headquarters of Korea's second-largest supermarket chain, Homeplus, and its largest shareholder, private equity firm MBK Partners, on Monday, as part of an investigation into alleged fraud and violations of the Capital Market Act. The Seoul Central District Prosecutors' Office announced that officials were dispatched to secure financial records in order to trace the flow of funds as Homeplus' financial health began to deteriorate after MBK Partners acquired the supermarket in 2015, culminating in losses of approximately 200 billion won ($138 million) in 2023. The retailer decided to apply to enter a rehabilitation program at the Seoul Bankruptcy Court on March 4. The search and seizure operation was conducted on suspicion of soliciting bond investments while deceiving investors, according to the prosecution. Prosecutors suspect that both Homeplus and its major shareholder, MBK Partners, had advance knowledge of the retailer's credit rating downgrade, but they continued to issue a large amount of short-term bonds and abruptly filed for rehabilitation, transferring the losses to investors and putting some 19,000 employees, 6,000 suppliers and partners in jeopardy. On Feb. 28, the Korea Investors Service downgraded Homeplus' credit rating from A3 to A3-, citing weak profitability, excessive debt and increasing uncertainty about the company's mid- to long-term competitiveness. Investigators believe Homeplus and MBK were informed about the rating downgrade at least by Feb. 25, when they received a preliminary notice from the credit agency. Despite knowing the company's rating was likely to decline, Homeplus issued asset-backed short-term bonds worth 82.9 billion won through Shinyoung Securities on Feb. 25. The prosecution reportedly claimed that selling bonds to investors in anticipation of corporate rehabilitation could be considered fraud, as such rehabilitation puts a hold on the financial procedures related to the debt, including interest payments. Four stock brokerage houses, including Shinyoung Securities, filed criminal complaints against Homeplus executives, alleging fraud for selling bonds while being aware of the rating downgrade and the upcoming corporate rehabilitation on April 1. The Financial Supervisory Service previously announced in a briefing on April 24 that it had secured concrete evidence that Homeplus and MBK Partners had been aware of the downgrade and planned to file for corporate rehabilitation for quite some time. South Korea's financial watchdog conducted an inspection into potential irregularities in the Homeplus scandal starting in mid-March, transferring records related to the controversial short-term debt sale to the prosecution on April 21. Prosecutors are reportedly scheduled to investigate MBK Partners Chairman Kim Byung-joo, MBK Partners Vice Chairman and Homeplus co-CEO Kim Kwang-il, and Homeplus President and co-CEO Joh Joo-yun as suspects. Detailed information about the investigation process has yet to be announced.
Korea Herald
04-03-2025
- Business
- Korea Herald
Homeplus granted corporate rehabilitation amid credit woes
The Seoul Bankruptcy Court announced Tuesday that it had approved the corporate rehabilitation request filed by South Korean supermarket chain Homeplus, initiating prompt proceedings just 11 hours after the filing. On Tuesday morning, Homeplus announced that it had filed for corporate rehabilitation as a preemptive measure to address potential funding issues following its recent credit rating downgrade. The court's decision to approve the proceedings was based on the assessment that a funding shortage could arise around May if the financial structure did not improve, despite the chain not being in default, due to the downgrade of its commercial paper credit rating. Homeplus will be able to proceed with the rehabilitation process while its normal operations continue without disruption. The deadline for submitting the rehabilitation plan is June 3. The court also ruled to uphold the company's current co-CEO system during the preemptive restructuring process, led by CEO Joh Ju-yeon and MBK Partners Vice Chairman Kim Kwang-il. In 2015, private equity fund MBK Partners acquired Homeplus for 7.2 trillion won ($4.9 billion). Homeplus's rehabilitation filing came as its improved sales and debt ratio were not adequately reflected in its credit evaluation, the company stated, leading Korea Investors Service to downgrade its credit rating from A3 to A3- on Friday. The credit agency attributed the rating cut to weakened profitability, high financial burdens and uncertainty surrounding mid- to long-term business competitiveness. 'We applied for rehabilitation proceedings to ease short-term debt repayment, as the lowered credit rating could potentially cause funding issues,' an official from Homeplus said, emphasizing that the move is only a preventive measure. As of January, Homeplus reported a debt ratio of 462 percent and annual sales of 7.04 trillion won, reflecting a 1,506 percent improvement in its debt ratio and a 2.8 percent increase in sales compared to the previous year. Although annual revenue had been on a four-year decline, dropping from 7.65 trillion won in 2018 to 6.48 trillion won in 2021, sales figures have trended upward in the past three years, reaching 6.6 trillion won in 2022 and 6.93 trillion won in 2023. In 2023, the company posted operating losses of 199.42 billion won, narrowing the 260.18 billion won loss from the year before. Excluding lease liabilities that account for all rent during the remaining contract period, Homeplus's actual financial debt, including operating funds borrowing, stands at about 2 trillion won. With over 4.7 trillion won in real estate assets, the company expects a smooth restructuring process with financial creditors under the rehabilitation plan. The company stated that deferring financial debt through rehabilitation will improve future cash flow by reducing financial burdens. Since most of its sales are cash-based, the company generates a surplus of about 100 billion won within just one or two months. While bond redemptions will be suspended during the rehabilitation proceedings, general business dealings with partner companies will be settled in full, and employee salaries will continue as usual, the company explained. 'Supermarket chains have faced challenges over the past decade, including regulatory pressures, the post-COVID shift to online shopping, and the rise of e-commerce. Despite this, we have achieved sales growth for three consecutive years and remain committed to improving business performance,' the company official said.
