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'Close to a lie': FSS chief eviscerates MBK over Homeplus repayment claims

Published: 26 Mar. 2025, 18:31

KIM JU-YEON
[email protected]

Investors who bought Homeplus's short-term bonds hold a protest in front of the supermarket chain's headquarters in Gangseo District, western Seoul, on March 25. [NEWS1]

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun strongly questioned MBK Partners' credibility in paying back Homeplus’s creditors in a radio show appearance on Tuesday, as the finance regulator’s probe into the private equity firm on alleged investor fraud continues.

The FSS launched an investigation on March 19 to see if Homeplus and its parent company had been aware of a forthcoming credit ratings downgrade that prompted the supermarket chain to file for corporate rehabilitation early in March. The retail chain was issuing commercial papers and short-term corporate bonds shortly before filing for receivership, which could constitute fraud if premeditated.

The agency has so far looked into how Homeplus’s corporate rehabilitation has affected its finances and the market impact of the short-term bonds issued by the supermarket chain, and is currently investigating any potential illegal practices conducted in the process, Lee said in an interview on MBC Radio's “Kim Jong-bae’s Focus.”

The chairman said he “could not trust MBK Partners” on its promises to pay back its creditors, such as the asset-backed short-term bonds (ABSTB) issued on Homeplus’s purchase card receivables.

The firm “says it will guarantee the principle for the ABSTB worth 400 billion won [$273 million], but if it had the liquidity to repay that in a short period of time, [Homeplus] would not have filed for corporate rehabilitation,” Lee said.

MBK’s claim is “close to a lie,” he said, as the company could not state when and how exactly it would repay the ABSTB.

Financial Supervisory Service Gov. Lee Bok-hyun holds a press briefing at the agency's offices in Yeongdeungpo District, western Seoul, on March 19. [NEWS1]

The FSS head also criticized the private equity firm for not sharing Homeplus’s losses or pursuing more company-led efforts.

He predicted that MBK Partners will hold onto Homeplus’s management while divesting the losses onto creditors, then profit by selling the retail chain for “trillions of won.”

MBK should share in the responsibility to solve Homeplus’s potential liquidity crunch as it was caused by the parent company’s poor management, excessive borrowing and profit recovery, he argued.

“Koreans distrust the way in which [MBK Partners] is passing losses onto society while keeping profit private despite enjoying benefits akin to a large company chairman,” Lee added.

“This is why the FSS will conduct the inspection, or investigation, more strictly.”

The governor nevertheless remained cautious about changing policies for private equity firms, saying they could benefit the Korean economy by restructuring industries in times of economic rebound or by pumping money into large businesses that have difficulty securing investments from regular banks.

Lee further said on the show that the FSS will accelerate its investigation into allegations that Sambu Construction was involved in premeditated stock price manipulation.

Homeplus has until June to submit its plan for corporate rehabilitation. The supermarket chain said it was continuing to pay off accounts receivables, such as supply payments, in its Wednesday briefing.

BY KIM JU-YEON [[email protected]]