When MBK Partners first acquired Homeplus, the scenario of 'eating and running' began to unfold. Ultimately, MBK sold off valuable stores to recover its investment, and it is attempting to offload the remaining liability through a rehabilitation process.
Ahn Soo-yong, chairperson of the Homeplus branch of the Mart Industry Union, said this during a discussion titled 'Is MBK's intention sincere, or is it eating and running?' held at the National Assembly Hall's Small Conference Room 1 on the morning of the 1st. The event was organized by the Democratic Party of Korea's Euljiro Committee, with Baek Joo-seon, representative lawyer of Daeyul Law Firm, presenting, and Jeong Yong-geon, executive director of the Public Pension Strengthening National Action (former head of the Financial Supervisory Center), serving as the moderator.
The speakers included Ahn, Kim Byeong-guk, chairperson of the Homeplus tenant emergency council, Lee Ui-hwan, executive director of the Homeplus pre-receivable victims' committee, Kim Deuk-ui, representative of the Financial Justice Alliance, and Park Won-ik, a doctor in economics at Korea University. They pointed out problems in various aspects, from MBK Partners' acquisition method to management practices and the current situation, urging for solutions.
Baek Joo-seon, lawyer, highlighted the risks of the leverage buyout (LBO) structure. This method involves acquiring a target corporation using substantial debt secured by the assets and future cash flows of the business. Typically, 60-70% of the acquisition amount is financed through debt, and sometimes even up to 90%.
He noted, 'MBK's acquisition of Homeplus was carried out in a typical LBO manner, creating an excessive liability structure.' He candidly acknowledged that the resulting financial burden has weakened Homeplus's competitiveness and emphasized the need for substantial new investments to effectively share the losses.
Ahn Soo-yong pointed out that MBK has maximized profits through continuous restructuring and workforce reduction. He stated, 'Last year, the number of workers and indirectly employed workers at Homeplus decreased by about 10,000 compared to 2015. During this reduction process, employees who had only handled accounting suddenly found themselves managing toy stores or processed food sections.'
He added, 'When one Homeplus store closes, an average of about 1,000 workers, including store employees, tenant merchants, and delivery company staff, lose their jobs. If Homeplus liquidates, the jobs of over 100,000 people will be at risk.'
Kim Byeong-guk, chair of the Homeplus tenant emergency council, stated, 'Following Homeplus's surprise rehabilitation application, about 4,600 tenant companies have found themselves in a situation where they cannot settle sales payments on time, forcing them to borrow money and incur interest.'
He continued, 'In March, the Homeplus representative promised to compensate for the damages from delayed sales payments and the interest incurred due to resulting loans, but no follow-up action has been taken to date.'
Lee Ui-hwan, executive director of the pre-receivable victims' committee, voiced concerns on behalf of the Homeplus asset-backed security (ABSTB) investment victims. He said, '80-90% of the victims are those whose living expenses were harmed, amounting to less than 300 million won, simply because they believed in Korea's financial and economic system and lived diligently.' He insisted, 'MBK should promptly repay the asset-backed securities before the Seoul Rehabilitation Court approves the rehabilitation plan.'
Kim Deuk-ui, representative of the Financial Justice Alliance, remarked, 'Legally, private equity funds must inject equity when conducting a leverage buyout (LBO), but there are no upper or lower limits on the amount. MBK essentially purchased Homeplus without debt, privatizing profits while socializing losses.'
Park Won-ik, a doctor in economics at Korea University, stated, 'Recent overseas research indicates that LBOs executed when credit regulations are relatively relaxed tend to deteriorate the profitability of target corporations and increase the likelihood of bankruptcy during economic crises.' He added, 'If the indiscriminate credit creation activities of private equity funds harm society, they must be subjected to legal and institutional regulation.'
Min Byeong-deok, commissioner of the Democratic Party of Korea's Euljiro Committee, commented, 'The M&A of Homeplus is meaningless unless the issues faced by workers, tenant businesses, suppliers, and pre-receivable victims are resolved. MBK must take responsibility for this.'