Korea Pizza Hut, which had been undergoing rehabilitation, will be sold to domestic private equity fund (PEF) managers KClavis Investment and Wintergold Private Equity. The sale price is said to be about 11 billion won.
According to the investment banking (IB) industry on the 12th, Korea Pizza Hut held a stakeholders' briefing at the grand auditorium of the Seoul Bar Association and announced a rehabilitation plan to sell its business rights to a newly established entity, PH Korea.
The transaction will proceed as a pre-approval M&A (business transfer) in which the existing corporation's asset and business rights are transferred to a third party. PH Korea, to be established by KClavis and Wintergold, will acquire the brand operating rights, company-owned stores, permits and licenses, and contractual relationships in a lump sum and continue operations. The existing Korea Pizza Hut entity will use the sale proceeds as funds to repay creditors and then be liquidated.
PH Korea has decided to succeed to the employment of all workers at company-owned stores and promised to guarantee employment for at least two years for those on open-ended contracts. Franchisees are also expected to go through contract alignment procedures so they can continue operating while maintaining brand continuity.
Earlier, Korea Pizza Hut ultimately lost its final appeal in the "franchise fee difference refund lawsuit" with franchisees last month. As a result, the total amount of rehabilitation claims, including finalized portions, reached about 61.5 billion won. It was concluded that repaying the debt while maintaining the existing entity was realistically impossible, leading to the decision to sell.
Of the 11 billion won in goodwill sale proceeds, the actual repayment funds are said to be about 7 billion won after excluding priority items such as public-interest claims. Based on this, the estimated repayment rate for rehabilitation claims is about 13%.
KClavis is an investment firm founded in 2013 by CEO Koo Jae-sang, who served as vice chairman at Mirae Asset Global Investments. Wintergold PE was founded in 2021 and is led by CEO Cho Won-hong, formerly a vice president at Hyundai Motor.
Korea Pizza Hut will collect creditors' opinions from the briefing, report them to the court, and proceed with the remaining steps, including approval for the business transfer and court approval of the rehabilitation plan.