Meritz conditionally supports Homeplus with 100 billion won; union urges MBK, Meritz to stop passing blame

Meritz Financial Group has approved a conditional 100 billion won (approximately $73 million) in emergency operating funds for the struggling retailer Homeplus. However, the financial support is contingent on Homeplus's major shareholder, MBK Partners, securing an additional 100 billion won from other sources.

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As a financial institution, we have proposed a substantial support plan to fulfill our social responsibility for Homeplus's recovery.

Meritz announced its board approved the final disbursement of funds on June 18, with plans to deposit the 100 billion won into an escrow account by June 19. A Meritz official stated the company proposed the support to fulfill its social responsibility as a financial institution for Homeplus's recovery. The group expects prompt execution of the funds.

The key condition set by Meritz involves not only MBK Partners' joint guarantee but also a personal guarantee from MBK Partners' chairman, Kim Byung-ju. Meritz argues this personal guarantee is necessary due to potential legal constraints under revised commercial law and ongoing shareholder protests against additional funding. MBK Partners, however, considers the demand for personal guarantees excessive, having already agreed to fund-level guarantees.

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The demand for personal guarantees from Chairman Kim Byung-ju is excessive, as we have agreed to joint guarantees at the fund level.

Homeplus's revised rehabilitation plan indicates a need for roughly 200 billion won to normalize operations. Meritz's proposal leaves the remaining 100 billion won to be raised by MBK Partners. Meritz has offered to consent to subordinate security interests on Homeplus's real estate to facilitate this additional borrowing, as the property is already encumbered by existing loans. Industry observers, however, deem it highly unlikely that new investors would provide 100 billion won on a subordinated basis for a company in rehabilitation proceedings.

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MBK Partners, as the largest shareholder and operator, bears the greatest responsibility for this situation. They are attempting to shift the burden of management failure onto creditors while enjoying profits from investment.

Meritz further pointed out that Kim Byung-ju possesses substantial personal wealth, estimated at $9.9 billion according to Forbes, and urged MBK Partners to present a credible self-rescue and funding plan. The union representing Homeplus workers has criticized both Meritz and MBK Partners for shirking responsibility, demanding that Kim Byung-ju and MBK Partners fulfill their obligations. Homeplus, meanwhile, highlighted its recovery potential, citing a 48% increase in sales for its Express division after normalizing product supply and improvements in its core store operations, urging Meritz to provide the full 200 billion won.

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Kim Byung-ju and MBK should take all possible measures, including guarantees. Meritz, as the largest creditor, must also fulfill its responsibility for rehabilitation.