Kwang-il Kim, vice chairman of MBK who holds the co-representative role at Homeplus, stated during a press conference held on the 14th at Homeplus headquarters in Gangseo District that the filing for corporate rehabilitation (court receivership) is a company-wide decision aimed at addressing short-term liquidity crisis and preventing bankruptcy due to credit rating downgrade. He claimed there was no directive from the major shareholder, MBK Partners.
Vice Chairman Kim dodged the question on whether MBK Chairman Byung-joo Kim would contribute personal funds, saying, "It's difficult to provide an answer." He also noted that the sale of Homeplus Express was halted due to the rehabilitation process and mentioned that no review has been made regarding future measures including restructuring. He urged understanding and cooperation, stating that the management team, including him, would prioritize repayment to small and medium-sized partners, while large corporations are expected to be repaid in phases starting from June.
The following is a question-and-answer session with Vice Chairman Kwang-il Kim and President Joo-yeon Cho, among other Homeplus executives.
Regarding the credit rating downgrade you first recognized on the 25th of last month, there are suspicions that preparations for the rehabilitation filing were made a month prior.
"There was no prior preparation. The decision was made after reviewing the confirmed credit rating downgrade during the holiday period."
I understand that there are many unpaid store rents after the sale and leaseback. Will the rent also be adjusted according to the rehabilitation process?
"I believe we do not have any overdue rent payments at this time. Payments are made at the end of the month, and a review will be needed in the process of receiving debt claims."
There are ongoing questions regarding MBK's commitment to Homeplus's rehabilitation. What is your stance on this matter?
"I believed that preventing Homeplus from bankruptcy is of utmost importance. If the company goes bankrupt, it will collapse rapidly. I determined that the only way to prevent bankruptcy and normalize the company is through rehabilitation."
There are also doubts about the expertise of Homeplus management, composed of MBK personnel, as it finds itself in a court receivership situation.
"I believe they are professional managers. In fact, last year, Homeplus had a higher sales growth rate than competitors both online and offline. The rehabilitation filing is to avoid the sudden credit rating drop, short-term liquidity issues, and the consequent risk of bankruptcy."
There are reports that MBK has already prepared for Homeplus's rehabilitation process and decided to close some stores or sell and lease them back.
"Once the rehabilitation application was filed, there is nothing we can lead anymore. The rehabilitation process is conducted in cooperation with creditors, debtors, and the court. This is unfounded."
Was the rehabilitation application discussed at the operational level within Homeplus, or did MBK direct its filing?
"The decision was made jointly by the Homeplus executives. It is the company's decision, not an issue of someone directing it."
I heard that payment settlements to suppliers are still delayed by a week. Could you explain the specific settlement plan?
"There are thousands of clients, and payments are made sequentially according to order. Those who express dissatisfaction have not yet reached their turn. I predict the number of people raising complaints will gradually decrease as payments are made daily."
There are also demands for contributions from MBK Chairman Byung-joo Kim.
"It does not seem to be something to discuss at the Homeplus meeting. It's difficult to answer at this moment."
Will the repayment of transaction claims to large corporations be postponed until June?
"We are prioritizing payments to small and medium-sized partners first, and we are assuring large corporations that if they wait a little, they will receive 100% repayment. Since the rehabilitation application date of the 4th of this month, all transaction claims, including those to large corporations, are being paid normally. What you mentioned refers to the portion of the transaction claims that will be partitioned and paid before the 4th of this month."
There are allegations that the early repayment clause of the Meritz Financial Group loan was behind the rush for the rehabilitation application.
"The loan repayment is due in May. However, we have already completed repayment of 85 billion won and are expecting between 80 billion to 90 billion won from real estate sales. There are no issues with the 2.5 billion won loan repayment. The rehabilitation application was filed to address the three months of short-term liquidity issues and the consequent bankruptcy risk due to credit rating downgrade, not because of the Meritz loan."
Gift certificates do not immediately help cash liquidity, right? There are reports of customers flocking to stores to use their gift certificates.
Sung-jin Lee, executive director of the finance management department, said, "The balance of paper gift certificates was 52.6 billion won as of the 5th of this month, and as of the 13th, it is around 40 billion won. That's not much."
How is the sale of Homeplus Express (supermarket) proceeding?
"Currently, we are not in a situation to discuss restructuring or the sale of Express. Once we enter the rehabilitation procedure, we must adhere to court mediation. The sale of Express was in progress before the rehabilitation application but is currently halted. We are not in a position to make decisions."
Will you attend the urgent inquiry by the National Assembly's Political Affairs Committee on the 18th?
"All CEOs are expected to attend. We are preparing the answers."
The settlement of accounts for the 2024 fiscal year (March 2024 - February 2025) should be completed. What is the scale of the deficit?
"The settlement of accounts has not been finalized yet. In the last two weeks, we have been solely focused on the rehabilitation process."