Meritz Maintains No Additional Position on Homeplus Incident... "Difficult to Execute Collateral Rights"

After Stating "No Issues with Fund Recovery," Meritz Remains Cautious
Likely to Monitor MBK and Homeplus Self-Rescue Plans

Meritz Financial Group, which lent over 1 trillion won to Homeplus, now undergoing corporate rehabilitation proceedings (court receivership), is cautious about making additional statements. While it maintains that fund recovery is possible through the execution of collateral rights, there is analysis suggesting that enforcing these rights may not be easy.

According to the financial investment industry on the 16th, Meritz has not made any further statements since asserting on the 4th, when Homeplus filed for rehabilitation proceedings with the court, that there would be no issues in recovering the funds.

According to Korea Credit Rating, Meritz executed a senior loan of 1.3 trillion won to Homeplus in May last year, using 62 stores as collateral. The interest rate is known to be 8% per annum. As of the end of last month, the outstanding loan balance was about 1.2 trillion won, representing the largest exposure among financial institutions to Homeplus.

Meritz holds the position that there is no problem in loan recovery since the collateral value is around 5 trillion won. Korea Credit Rating also stated, "According to various precedents, trust property is considered owned by the trustee, and the rehabilitation plan cannot affect it."

Accordingly, Meritz appears to be waiting for the self-rescue plan from Homeplus and MBK Partners before taking further action.

However, if collateral rights are executed and Homeplus stores are disposed of, there is an analysis that the reality is unlikely due to the instability of the positions of about 20,000 Homeplus employees and the domino damage expected to cooperating companies.

Additionally, the National Assembly’s planned inquiry into this issue on the 18th and the financial authorities’ commencement of investigations also act as burdens.

Meanwhile, cooperation from Meritz is necessary for Homeplus and MBK Partners to prepare a rehabilitation plan, as a significant portion of Homeplus’s 2 trillion won financial debt is related to Meritz. Therefore, it is expected that both sides will negotiate before the rehabilitation plan submission deadline of June 3, and Meritz will consider measures such as loan repayment deferral and interest rate reduction.