National Assembly Political Affairs Committee Holds Emergency Hearing on the 18th
Questions Raised Over Premeditation of Rehabilitation Procedures and Timing of Decision
Homeplus Executives Including Vice Chairman Kim Kwangil Deny Allegations
Homeplus management denied suspicions raised by the political circle that they had premeditated the sudden filing for corporate rehabilitation procedures, stating, "There was no other way to prevent default."
On the 18th, at the National Assembly's Standing Committee on Economy and Finance plenary meeting regarding urgent issues related to Homeplus, MBK Partners, and Sambutogeon, Kim Kwang-il, Vice Chairman of MBK Partners and Co-CEO of Homeplus, is responding to lawmakers' questions. Photo by Kim Hyun-min
Kim Kwang-il, co-CEO of Homeplus and Vice Chairman of MBK Partners, the private equity fund (PEF) operator and major shareholder of Homeplus, explained at an emergency hearing on the Homeplus incident held by the National Assembly's Political Affairs Committee on the 18th, "A3- commercial paper is a grade that is hardly traded or issued in the market," adding, "There was a repayment demand of 600 to 700 billion KRW within three months, and there was no way to prevent default." He further stated, "We judged that it was appropriate to first apply for rehabilitation procedures to protect our business partners and employees, and then negotiate separately with creditors."
Kim Seung-won, a member of the Political Affairs Committee from the Democratic Party of Korea, questioned Homeplus's claim that the decision to apply for rehabilitation procedures was made after the credit rating downgrade was confirmed on the 28th of last month. Kim said, "It is suspicious that the Seoul Rehabilitation Court's commencement decision was made on the same day the rehabilitation procedure was applied for, but there are more than 50 documents that must be submitted for the application, and it is unreasonable that preparations for issuing them were completed during the holiday period," and asked, "Since when did you start preparing?" Lee In-young, also from the same party, pointed out, "The days from the 1st to the 3rd of this month, before the rehabilitation application after the credit rating downgrade, were holidays when government offices were closed," adding, "There are documents that must be issued not only online but also by visiting in person, so it is unconvincing that government offices would issue them during holidays."
In response, Vice Chairman Kim emphasized, "We prepared the rehabilitation application between February 28 and midnight of March 4." He added, "We discussed with executives whether there were any alternatives to rehabilitation procedures immediately after the credit rating downgrade, and judged there were none, so we prepared the rehabilitation application," and "We simultaneously prepared related documents in line with the board resolution on March 3." Co-CEO Cho Joo-yeon of Homeplus also supported this, saying, "After the credit rating downgrade, we discussed (the rehabilitation procedures) with executives, exactly as Vice Chairman Kim said."
Vice Chairman Kim stated, "Homeplus aims to repay the principal of all claims within the rehabilitation procedures," adding, "Trade claims are currently being paid, so the balance is not large, and financial claims are about 2.2 trillion KRW, but the real estate owned is worth about 4.7 trillion KRW, so if given time, we can repay the principal in full." In response, Representative Kim criticized, "If the debt is in the 2 trillion KRW range and assets are in the 4 trillion KRW range, why did you apply for rehabilitation? It doesn't make sense."
Kim Kwang-il, Vice Chairman of MBK Partners and Co-CEO of Homeplus (left), and Cho Ju-yeon, Co-CEO of Homeplus, are seen conversing as witnesses at an emergency inquiry on "Homeplus, MBK Partners, and Sambu Construction" held by the Political Affairs Committee at the National Assembly on the 18th. Photo by Kim Hyun-min
At Shin Young Securities, which issued Homeplus's asset-backed short-term electronic bonds (ABSTB) and sold them to securities firms and investors, Homeplus's sudden rehabilitation application was also evaluated as unusual. Geum Jeong-ho, CEO of Shin Young Securities, responded to Democratic Party lawmaker Kang Hoon-sik's question, "Is there any case where rehabilitation was applied for just one business day after a credit rating downgrade without any self-help measures?" by saying, "As far as I know, there is no such case." When asked, "Isn't it reasonable to judge this as a sudden rehabilitation application to evade responsibility?" he added, "I am not the one to judge, but those in the capital market may think so."
CEO Geum pointed out, "Even if the credit rating dropped from A3 to A3-, A3- is still an investment-grade rating," adding, "If people think that such companies might suddenly apply for rehabilitation procedures, who would invest?"
Meanwhile, ruling and opposition lawmakers strongly criticized MBK Chairman Kim Byung-joo, who was summoned as a key witness for the emergency hearing but did not appear citing an overseas business trip, and agreed through a secretariat consensus to hold not only a criminal complaint but also a separate hearing.
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