Kim Kwang-il, MBK Vice Chairman, "Preparing Corporate Rehabilitation After Credit Rating Downgrade"

Press Conference Held at Homeplus Headquarters
Urgent Decision Made During Samiljeol Holiday After Credit Rating Downgrade
Unrelated to Meritz Early Repayment... Repayment Capability Secured

Homeplus denied allegations that it had been preparing for corporate rehabilitation for several months after recognizing a credit rating downgrade last month. The company stated that the decision was made urgently during the holiday period after the credit rating was finalized.

Kim Kwang-il, Vice Chairman of MBK Partners and co-CEO of Homeplus, held a press conference with Homeplus management on the 14th at the main branch in Gangseo-gu, Seoul, to clarify this.

Homeplus revealed that it first received a preliminary notice of credit rating downgrade from the credit rating agency at 4 p.m. on the 25th of last month and requested a reassessment the following day. When the request was not accepted, the management urgently discussed during the Samiljeol holiday period and decided to apply for corporate rehabilitation procedures. Vice Chairman Kim stated, "If a distribution company goes bankrupt, it collapses rapidly," adding, "The top priority was to normalize the company before bankruptcy due to liquidity crises such as short-term working capital financing, and we believed corporate rehabilitation was the only way."

He also clarified that it was not due to the early repayment clause of approximately 1.3 trillion won borrowed from Meritz Financial Group. Previously, Meritz Securities, Meritz Fire & Marine Insurance, and Meritz Capital lent 1.3 trillion won to Homeplus in May last year through refinancing loans, with an interest rate of about 8% per annum. At the same time, they imposed a clause requiring early repayment of 250 billion won within one year and 600 billion won within two years.

Vice Chairman Kim explained, "About 80 billion won of the loans from Meritz have already been repaid, and the remaining amount could be sufficiently repaid according to real estate sale contracts and others," adding, "Due to the nature of the distribution industry, concerns about bankruptcy arose from the maturity of promissory notes and short-term bonds to be repaid within three months, which led to the rehabilitation application."

He also refuted allegations that MBK had pocketed huge profits from Homeplus. Vice Chairman Kim said, "MBK Partners did not receive dividends as a major shareholder because Homeplus did not generate profits," and added, "The only dividends received were about 3% annually from preferred shares invested."

Regarding the request for a personal donation from Kim Byung-joo, Chairman of MBK Partners, he did not respond. Vice Chairman Kim said, "This is not a matter to be answered here," and added, "As shareholders, we will fulfill our social responsibilities and do our best to normalize Homeplus."

Kim Kwang-il, Co-CEO of Homeplus (left), is speaking at a press conference related to corporate rehabilitation proceedings (court receivership) held at the Homeplus headquarters in Gangseo-gu, Seoul on the 14th. On the right is Cho Ju-yeon, Co-CEO of Homeplus. Photo by Yonhap News.