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Homeplus store exterior (Photo courtesy of Homeplus) |
[Alpha Biz= Paul Lee] Homeplus has requested additional debtor-in-possession (DIP) financing from Meritz Financial Group following the extension of its court-led rehabilitation process, triggering controversy over burden-sharing between creditors and its private equity owner.
According to industry and financial sources on May 1, Homeplus asked Meritz—its largest creditor—for emergency funding after the Seoul Bankruptcy Court extended its rehabilitation proceedings by two months to July 3.
In a statement, Homeplus said Meritz is “virtually the only realistic entity capable of supplying large-scale liquidity quickly,” urging the group to make a forward-looking decision considering both recovery prospects and corporate turnaround value.
However, opposition has intensified, particularly from a bondholders’ emergency committee representing victims of short-term commercial paper tied to Homeplus. The group warned that proceeding with additional DIP loans without protecting subordinated creditors could lead to legal action against Meritz.
Critics argue that increasing DIP financing may further delay repayment to existing creditors, effectively pushing their recovery further down the priority ladder.
The committee also called on MBK Partners, Homeplus’ largest shareholder, to take greater responsibility by injecting fresh capital, including equity contributions or recapitalization. It urged full disclosure of all economic benefits MBK has received—such as management fees, performance fees, advisory fees, and related-party transactions—through its fund and affiliated structures.
While MBK has stated it has provided roughly KRW 400 billion in support, critics claim only about KRW 40 billion represents actual cash injection, with the remainder consisting largely of guarantees and indirect support.
Market concerns are also rising for Meritz. Additional DIP financing could require the firm to increase loan-loss provisions, potentially weighing on its credit rating and shareholder sentiment. Some investors have already expressed frustration, arguing that funds should be recovered rather than extended further.
The dispute highlights broader criticism that losses stemming from private equity investment risks may be shifting onto creditors and financial institutions, as Homeplus’ restructuring enters a more contentious phase.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
