Meritz calls Homeplus rehabilitation termination 'deeply regrettable,' says MBK chairman yet to provide guarantee

Meritz Financial Group said Friday it finds the court's decision to terminate Homeplus's rehabilitation proceedings "deeply regrettable," adding that MBK Partners Chairman Kim Byung-ju has yet to provide a personal guarantee tied to a 100 billion won ($64.3 million) emergency debtor-in-possession loan.

"We have hoped all along that Homeplus would be normalized through the rehabilitation process, and we have done everything within the bounds of the law as a creditor — including suspending the exercise of our security rights, cooperating with the early repayment of trade receivables, and placing 100 billion won in conditional DIP financing into escrow," Meritz said in a statement Friday.

At the heart of the dispute is a court requirement that Homeplus secure 200 billion won in outside funding. The Seoul Bankruptcy Court ruled that the revised rehabilitation plan the company submitted lacked any concrete external financing arrangement.

Meritz said it placed 100 billion won in DIP financing into escrow on the condition that MBK Partners and Chairman Kim provide a personal guarantee, and that MBK is responsible for raising the remaining 100 billion won. MBK, however, has demanded that Meritz provide the full 200 billion won as a loan.

"Chairman Kim has not yet provided a guarantee for the 100 billion won DIP loan that Meritz extended," the group said. "It is impossible to avoid the criticism that the Homeplus crisis is the dismal result of MBK spending the past decade focused solely on recouping its investment. Even after more than 15 months since the rehabilitation proceedings began, the operating environment and corporate value have only deteriorated further."

Meritz urged MBK to act responsibly in the two weeks remaining, saying the private equity firm must go beyond simply recovering investment returns and fulfill its obligations as the largest shareholder and management authority. "Please stop demanding that creditors break the law," the statement added.

Meritz also pledged to cooperate actively in any subsequent proceedings and to work to minimize harm to stakeholders including Homeplus employees, suppliers and small-business partners.