The Democratic Party of Korea is stepping in to mediate between MBK Partners, the largest shareholder of financially troubled Homeplus, and Meritz Financial Group, its largest creditor, in an effort to rescue the retailer from bankruptcy. The party plans to coordinate the two sides' differences over rehabilitation funding while raising the possibility of the National Pension Service withdrawing its investment, intensifying last-minute pressure.
According to political sources on Sunday, lawmakers of the Democratic Party's Eulji-ro Committee, including Rep. Min Byoung-dug and Rep. Kim Nam-keun, plan to meet with officials from MBK Partners, the largest shareholder of Homeplus, and Meritz Financial Group, its largest creditor, at an undisclosed location in Seoul on the morning of the 9th to discuss rehabilitation measures. Immediately after the meeting, they will hold talks with Kim Sung-joo, chairman of the National Pension Service (NPS).
Direct Mediation With MBK, Meritz; Investment Withdrawal Card in Play
At the meeting, the Democratic Party plans to urge MBK and Meritz to provide the funding needed to carry out the rehabilitation plan. The two sides are currently at odds over the responsibility and scale of the support. MBK's position is that if Meritz Financial lends 200 billion won in rehabilitation funds, MBK can provide a joint guarantee worth 100 billion won. Meritz Financial, on the other hand, maintains that even if both MBK and MBK Partners Chairman Michael Byungju Kim participate in a joint guarantee, the maximum support is capped at 100 billion won. The Democratic Party intends to directly mediate between the two sides, which remain on parallel tracks, to find common ground.
The Democratic Party is also playing the pressure card through the National Pension Service. In the meeting with Chairman Kim Sung-joo, the party plans to ask the NPS to consider withdrawing its investment in MBK. The logic is that since the Financial Supervisory Service recently imposed a heavy sanction on MBK, the NPS should withdraw its investment in accordance with responsible investment principles. The NPS is known to have invested approximately 2.5 trillion won in 11 of MBK's private equity funds.
"Since both MBK and Meritz have already reaped considerable profits, they should show a responsible attitude toward Homeplus's rehabilitation," a Democratic Party official said. "As their very will to pursue rehabilitation is now in doubt, the aim is to bring the three parties together in one place to find a solution."
Change in Stance Uncertain; No Response to Data, Meeting Requests
On the 3rd, the Seoul Bankruptcy Court terminated the corporate rehabilitation process for Homeplus, saying the revised plan it had submitted "has no feasibility." At the time, the court said, "Although the sale of the Homeplus Express business division was completed, the remaining business divisions continued operations without any mergers and acquisitions (M&A), resulting in declining revenue and a sharp increase in public-interest claims such as wages and payables for goods." The court added, "Despite requiring at least 200 billion won in operating funds to carry out the rehabilitation plan, no funds have been raised to date." However, the court set a 14-day period for immediate appeal, allowing the rehabilitation process to resume if Homeplus succeeds in securing feasible funding.
Still, it remains uncertain whether MBK and Meritz will take a more forward-looking stance. Both sides recently declined to comply with the Democratic Party Eulji-ro Committee's request to submit accounting data, and reportedly rejected a request to meet with Meritz Financial Group Chairman Cho Jung-ho. A political source said, "(Both sides) have consistently maintained the attitude that they just need to hold out until the rehabilitation process is concluded."
There are also voices calling for a more active response at the party level. Even with the deadline set by the court running short, only mediation attempts centered on the Eulji-ro Committee are being made, while the party-level response has been passive. In fact, Yoo Dong-soo, chairman of the National Policy Committee who heads the MBK-Homeplus Crisis Resolution Task Force, has been delaying the schedule for a "Homeplus hearing" demanded by Eulji-ro Committee lawmakers, citing the People Power Party's non-participation. Chairman Yoo said the previous day, "Once the opposition secretary is appointed, we will pursue the hearing after secretary-level consultations," adding, "We may hold the hearing after the (appeal) deadline."
If Homeplus actually goes bankrupt, some 12,000 directly employed workers and about 1,000 indirectly employed workers are expected to be unable to avoid job losses. Some 4,600 partner companies that have supplied goods and services to Homeplus would also suffer a fatal blow. Labor groups claim that when directly and indirectly employed workers, partner companies, and small business tenants are included, 300,000 people are affected by the Homeplus crisis.
