MBK Forced into a Corner as Homeplus Faces Corporate Rehabilitation Fallout

[Korea Financial Times, Park seulgi] MBK Partners, the majority shareholder of Homeplus, has been pushed to the brink. The firm acquired Homeplus a decade ago with KRW 2.7 trillion in leveraged buyout debt but failed to manage it effectively, leading to the current crisis. MBK’s abrupt decision to file for corporate rehabilitation without a concrete self-rescue plan has earned it the stigma of "one of the biggest management failures in history." The fallout from the Homeplus situation is expected to affect not only Homeplus Express, which is currently undergoing a separate sale, but also Lotte Card and Korea Zinc, which are embroiled in a management dispute.

According to industry sources on the 6th, MBK’s ongoing sale of Homeplus’s supermarket chain, Homeplus Express, has been halted. While the sale of Homeplus Express was considered a key step in MBK’s exit from Homeplus, the corporate rehabilitation proceedings have resulted in a temporary asset freeze, suspending the separation and sale of Homeplus Express. Previously, a domestic retail company had begun due diligence for its acquisition.

MBK and Homeplus appointed Morgan Stanley as their sale advisor in June last year and initiated the sale of Homeplus Express, a business division within Homeplus. Homeplus Express was considered attractive due to its extensive network of directly managed stores in Seoul and the capital region, as well as its standout immediate delivery service. Reports indicated that several domestic retailers and China's AliExpress had shown interest.
Homeplus Express recorded KRW 1.2 trillion in revenue and approximately KRW 100 billion in EBITDA in 2023. If the sale had gone through, it was projected to inject up to KRW 1 trillion in cash. However, the current situation has not only halted the separation of the supermarket chain but also cast uncertainty over the entire Homeplus sale.

MBK’s management capabilities have come under scrutiny following Homeplus’s corporate rehabilitation. Since MBK’s acquisition, Homeplus has suffered declining sales, deteriorating profitability, and a reduction in store numbers. Instead of investing, MBK focused on selling assets to repay acquisition debt, prioritizing divestment over sustainable management. As a result, MBK has tarnished its reputation and credibility as the top private equity fund (PEF) in South Korea.

Industry experts believe the crisis will also impact MBK’s efforts to sell Lotte Card and its involvement in the management dispute at Korea Zinc.


Lotte Card, another MBK portfolio company, has recently faced controversy. MBK has been attempting to sell Lotte Card, which it acquired from Lotte Group in 2019. However, a default occurred on KRW 78.6 billion in factoring receivables, resulting in a loss of KRW 38.1 billion. Factoring is a financial service in which a company sells its accounts receivable to a financial institution to secure funds. While this incident is not expected to significantly affect Lotte Card’s financial standing or credit rating, it could create concerns for potential buyers.
A similar situation is unfolding at Korea Zinc. Korea Zinc Chairman Choi Yoon-bum and his management team have consistently argued that "allowing a PEF to acquire control for short-term gains would have a negative impact on Korea Zinc."

Homeplus is currently scrambling to mitigate the fallout from the crisis. Amid concerns over potential payment delays, some business partners — including Shilla Duty Free, CJ Foodville, Everland, and CGV — have suspended acceptance of Homeplus gift certificates, raising fears of a second "TMON incident."

Regarding this, Homeplus stated, "There has been some confusion regarding the use of gift certificates, but they remain valid and can be used normally at Homeplus stores." The company added, "Some affiliates have refused to accept the gift certificates despite them being fully repayable trade receivables. This appears to be an overreaction driven by concerns linked to last year’s e-commerce industry non-settlement crisis."

Homeplus plans to engage with business partners promptly to resolve the issue.
On this day, Homeplus announced that it had resumed payments for general commerce trade creditors, which had been temporarily suspended due to the corporate rehabilitation proceedings.

A Homeplus representative stated, "As of the 6th, our available cash balance stands at KRW 309 billion, and we expect a net cash inflow of approximately KRW 300 billion from business operations throughout March, bringing our total available funds to over KRW 600 billion. There is no issue in meeting our obligations to general trade creditors."

"Starting today, we have resumed payments for general commerce trade creditors and plan to fully repay them in sequence," the representative added.

Park seulgi (seulgi@fntimes.com)