MBK to Cancel 2.5 Trillion Won Homeplus Shares for Free, "Relinquishing All Rights for Normalization"

High Real Estate Value... Seeking a New Buyer

MBK Partners has decided to cancel 2.5 trillion won worth of Homeplus common shares without compensation and seek a new buyer based on the value of the real estate it holds. The company stated that it would relinquish all rights and focus on normalizing Homeplus to the greatest extent possible.

On June 13, MBK released a statement outlining these plans. MBK said, "Although Homeplus owns valuable real estate, its recent business performance has not been strong, resulting in its liquidation value exceeding its going-concern value." The company added, "We will pursue a 'pre-packaged M&A' to avoid liquidation." Previously, Samil PwC, which was designated as an investigator by the Seoul Bankruptcy Court, submitted a report the previous day stating that Homeplus's liquidation value is 3.7 trillion won, higher than its going-concern value of 2.5 trillion won.

Unlike a typical M&A that involves selling existing shares, a pre-packaged M&A issues new shares, making the new acquirer the largest shareholder. The plan is to use the new capital brought in by the acquirer to repay creditors and to continue operations under the new owner, thereby maintaining employment and normalizing the company. Similar pre-packaged M&As have previously been carried out by companies such as Korea Express, Pan Ocean, Korea Line, SsangYong Motor, Eastar Jet, and Pantech.

If the court approves the M&A application, the deadline for submitting the rehabilitation plan, currently set for July 10, will be postponed until after the M&A is completed. However, if a suitable buyer cannot be found, Homeplus is likely to enter liquidation proceedings. This is because a rehabilitation plan can only be created if the going-concern value is assessed to be higher than the liquidation value.

Meanwhile, Kim Kwangil and Cho Jooyeon, the court-appointed co-CEOs of Homeplus, separately submitted a statement to the court asserting that the going-concern value is higher.

An MBK representative stated, "If the pre-packaged M&A proceeds, the 2.5 trillion won worth of Homeplus common shares we hold will be canceled without compensation," and added, "MBK Partners will relinquish all rights, including management control, and will make every effort, without any compensation, to support the acquisition of Homeplus by a new buyer."