MBK had prior knowledge of credit downgrade on Homeplus, regulator finds

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MBK had prior knowledge of credit downgrade on Homeplus, regulator finds

Published: 24 Apr. 2025, 18:28

PARK EUN-JEE
[email protected]

Audio report: written by reporters, read by AI

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun speaks during a briefing held at the FSS headquarters in western Seoul, on April 24. [YONHAP]

Korea's financial regulator found that MBK Partners, a major private equity firm in Korea, had planned the rehabilitation scheme of Homeplus “for quite some time,” handing the related evidence to the prosecutors.

“We have secured concrete evidence that Homeplus and MBK Partners were aware of the downgrade in Homeplus’s credit rating and had been planning to file for corporate rehabilitation for quite some time,” said Financial Supervisory Service (FSS) Gov. Lee Bok-hyun on Thursday.

The FSS alleges that the private equity firm engaged in the selling of Homplus-related short term debt instruments including asset-backed short-term bonds (ABSTBs) despite being aware of the impending court rehabilitation plan and rating downgrade, a claim MBK has denied.

“Homeplus and MBK Partners did not anticipate the downgrade of Homeplus’s credit rating, nor did they make any prior preparations for rehabilitation proceedings,” MBK said in a statement on Thursday, adding that Homeplus and MBK were “not parties to the issuance, sale or resale of asset-backed short-term bonds on Feb. 25, nor were they involved in any aspect of the transaction.”

The announcement of the credit rating cut took place on Feb. 27, following the filing for court rehabilitation, which is similar to the United States' Chapter 11, on March 4.

The financial authorities referred the case to the prosecution as a fast-track emergency matter on Monday, and it was assigned to the Seoul Central District Prosecutors’ Office on Tuesday.

Anti-Corruption Division 3 of the Seoul Central District Prosecutors’ office, which is already investigating related complaints involving ABSTBs, is expected to lead the investigation.

Lee, himself a prosecutor before taking the stint, vowed to cooperate with the prosecution by the end of May.

The governor also noted that MBK’s efforts to mitigate the court procedure's impacts on Homeplus sellers and merchants are far from sufficient.

After pledging that he would use his private funds to support those affected, MBK Partners Chairman Michael ByungJu Kim provided a payment guarantee for a loan worth 60 billion won ($42 million), which fell short of expectations.

BY PARK EUN-JEE [[email protected]]