'Violated promises on IPO, management rights'
'Will pursue legal action over unfair contract terms'
Golfzon Holdings is pushing back against private equity fund manager MBK Partners' plan to sell Golfzon County, saying it is considering legal action. The dispute has escalated after reports emerged that MBK had signed a share purchase agreement with a consortium led by The Siena Group.
Golfzon Holdings issued an official statement Wednesday saying it "cannot agree to MBK Partners' unilateral pursuit of a Golfzon County sale, which runs counter to the original intent of the investment and partnership."
Reports in investment banking circles said MBK had signed a share purchase agreement with a consortium comprising The Siena Group and CL Asset Management to acquire a controlling stake in Golfzon County. The enterprise value, including debt, is estimated at around 1.8 trillion won ($1.36 billion).
The dispute traces back to MBK's 2018 investment in Golfzon County. Golfzon Holdings said it accepted the investment on the condition that MBK would exit through an initial public offering and that Golfzon Holdings' management rights would be protected.
Golfzon County attempted to list in 2022 but the plan fell through amid a sluggish stock market. MBK subsequently shifted course toward a stake sale, appointing a sale manager in March to formally begin recovering its investment.
A drag-along right included in the shareholders' agreement has emerged as a key point of contention in the sale process. If MBK exercises that right, Golfzon Holdings' own stake in Golfzon County could be swept into the sale. Golfzon Holdings is also reported to hold a right of first refusal over its shares.
Lease agreements on golf courses have added another layer of conflict. Golfzon Holdings said it had leased four of its golf courses to Golfzon County at below-market rates with no separate deposit, in order to support the company's growth and IPO preparations. Golfzon Holdings said it had repeatedly asked MBK to revise the lease terms but received no concrete response or proposed solution.
"We are reviewing all available means, including legal action, to protect our legitimate rights and management authority and to correct unfair contract terms," Golfzon Holdings said, adding that it would "actively take the necessary measures."
yjc@heraldcorp.com
