MBK and Homeplus Refute Governor Lee Bokhyun's Claims
"If We Had Known, We Would Have Prevented the Downgrade Before Filing for Rehabilitation"
Kim Kwangil, Vice Chairman of MBK Partners and Co-CEO of Homeplus, is touching his face during a current issue inquiry related to the 'Homeplus Incident' held at the National Assembly's Political Affairs Committee on the 18th. March 18, 2025 Photo by Kim Hyunmin
The Financial Supervisory Service has secured evidence that MBK Partners and Homeplus were aware of a credit rating downgrade in advance and had planned to file for corporate rehabilitation well before the event. This evidence has been forwarded to the prosecution. In response, MBK and Homeplus have denied the allegations, stating that if they had known about the downgrade in advance, they would have submitted explanatory materials before the review, immediately after receiving notification of the impending downgrade, in order to maintain their credit rating.
On the 24th, MBK and Homeplus released a joint statement addressing these points. The main message is that they did not prepare for the corporate rehabilitation process in advance. MBK and Homeplus stated, "At around 4 p.m. on February 25, we received the first notification from Korea Investors Service regarding the impending credit rating downgrade. We immediately prepared an objection and met with Korea Investors Service officials at around 2 p.m. the following day," adding, "At that meeting, we provided and explained MBK's 100 billion won capital replenishment agreement for Homeplus, as well as the effect of reducing the debt ratio (from 982.7% to 425.9%) due to changes in the terms of Homeplus's redeemable convertible preferred shares (RCPS)."
They argue that if they had foreseen the downgrade, they would have presented materials showing the improved debt ratio in advance to prevent the downgrade from happening at all. MBK and Homeplus stated, "If we had anticipated the downgrade, the capital replenishment agreement and the RCPS terms change should have been submitted before the regular credit review in February. The fact that these measures were only taken after receiving the notice on February 25 clearly shows that we did not foresee the downgrade in advance."
The credit rating downgrade for Homeplus was finalized on February 27. MBK and Homeplus explained, "On the 28th, we were informed by Shin Young Securities, the issuer of the accounts receivable-backed short-term bonds (ABSTB) and commercial paper, that only 40% of the existing short-term operating funds could be raised, and we began preparing the rehabilitation application documents." They added, "In 2023, staff from the shareholder company sought one-time advice on whether the rehabilitation process would be suitable for a large retail company, but the advice was not practical and the matter was dropped. This is unrelated to the current application for the commencement of rehabilitation proceedings."
They also drew a clear line, stating that they had no involvement in the distribution of ABSTB. MBK and Homeplus asserted that they were neither the issuer, seller, nor reseller of the product, and were not involved in any related transactions.
MBK and Homeplus explained, "ABSTB is a financial investment product issued by a special purpose company (SPC) established by Shin Young Securities, which effectively acquires Homeplus's trade receivables from credit card companies and then issues the product to investors." They further clarified, "Homeplus could not and did not participate in the SPC's card receivables participation transactions, ABSTB issuance transactions, or resale transactions by ABSTB purchasers."
They stated that Homeplus only entered into contracts with credit card companies to pay for goods and, for short-term funding plans, simply confirmed the issuance size (bond demand) in advance with Shin Young Securities, the issuer of ABSTB.
Meanwhile, on the same day, Lee Bokhyun, Governor of the Financial Supervisory Service, announced that concrete evidence had been secured showing that MBK and Homeplus were aware of the credit rating downgrade in advance and had prepared the corporate rehabilitation application well ahead of time. Previously, on the 21st, financial authorities referred the investigation into alleged fraudulent transactions by Homeplus and the management of its major shareholder MBK Partners to the prosecution as an emergency measure (fast track).
Governor Lee stated, "The actions taken by MBK and Homeplus after filing for rehabilitation give the impression that the roles of debtor, major shareholder, and creditors have been reversed," adding, "It is a situation where previous concerns are becoming reality, as suppliers, landlords, and creditors are being forced to make sacrifices while the parties responsible appear to be evading accountability."
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