[비즈한국] With Homeplus filing for corporate rehabilitation, criticism of its largest shareholder, MBK Partners (MBK), is intensifying. Although MBK Chairman Michael Kim has promised to contribute personal funds to Homeplus, skepticism regarding his sincerity remains high. This is because no specific details on the scale or timing of the contribution have been disclosed. Some observers view this as an attempt by MBK to manage public opinion ahead of its bid to secure management control of Korea Zinc010130.
On the 16th, MBK announced that Chairman Michael Kim would contribute personal funds to Homeplus. MBK stated, "Chairman Kim will provide financial support to ensure that payments are promptly made to small business partners, who are expected to face particular difficulties," adding, "We will ensure that Homeplus operates stably under the protection of the rehabilitation court, minimizing damage to various stakeholders."
If Chairman Kim follows through with his personal contribution, it could help improve the liquidity of Homeplus. However, MBK did not reveal the specific scale or timing of the contribution. It is currently difficult to predict to what extent Chairman Kim’s personal funds will actually benefit Homeplus.
Following Homeplus's application for rehabilitation on the 4th, MBK appeared passive in issuing public statements. At the time, MBK stated, "The rehabilitation process for Homeplus is an unavoidable decision to preemptively alleviate potential short-term funding burdens caused by credit rating downgrades, ensuring stable business operations," adding, "We will cooperate fully for the normalization of Homeplus management under the supervision of the rehabilitation court, with a posture of selfless dedication."
No statements had been released under MBK’s name since March 4th. This triggered criticism from Homeplus employees, the labor sector, and even political circles. On the 6th, Cho Seung-rae, senior spokesperson for the Democratic Party of Korea, pointed out, "MBK has been suffering from liquidity issues due to excessive debt-driven management," adding, "We will absolutely not tolerate any attempt to tear Homeplus apart and engage in a 'hit-and-run' exit under the guise of corporate rehabilitation." The National Tax Service has initiated a tax audit into Homeplus, and the Financial Supervisory Service (FSS) has also launched an investigation related to the company.
Ultimately, MBK held a press conference on the 14th to provide explanations. Kim Kwang-il, Vice Chairman of MBK, said at the time, "We determined that there was no other way to prevent bankruptcy and normalize the company than through rehabilitation," adding, "After filing for rehabilitation, there is nothing we can do on our own." However, the press conference appeared to be more about self-defense than offering solutions. The consensus is that the press conference failed to significantly sway public opinion.
Consequently, MBK played the card of Chairman Michael Kim contributing personal funds. Nevertheless, the public response remains unfavorable. Critics argue that MBK is only now trying to appease public sentiment because it has been backed into a corner. Currently, MBK is partnering with Young Poong Corporation000670 to secure management control of Korea Zinc. If public opinion against MBK worsens, minority shareholders of Korea Zinc, mindful of this, might turn their backs on MBK.
Korea Zinc is scheduled to hold its general shareholders' meeting on March 28th. The Young Poong-MBK alliance holds a 40.97% stake in Korea Zinc. The side of Korea Zinc Chairman Choi Yun-beom, who is at odds with Young Poong, holds 34.35% including friendly stakes. However, a cumulative voting system will be applied to this Korea Zinc shareholders' meeting. The cumulative voting system allows a shareholder as many votes as the number of directors to be elected, which can all be cast for a single candidate. For instance, if five director positions are up for election, a shareholder gets 5 votes per share, which can be concentrated on one candidate. With this system in place, the Young Poong-MBK alliance cannot guarantee control over the Korea Zinc board, despite having a larger stake. For the Young Poong-MBK alliance, the votes of Korea Zinc’s minority shareholders are crucial, making the management of public opinion a necessity.
It is not just public opinion that they must be wary of, but also investigative authorities. With the National Tax Service and financial authorities already investigating Homeplus, any further deterioration in the situation could lead to MBK itself becoming a target of investigation. If these agencies take full-scale action, it would inevitably cause significant disruption to MBK's future operations. Some analysts suggest that Chairman Michael Kim's announcement of personal funding was made with these authorities in mind, as well as public opinion.
However, even after Chairman Michael Kim's announcement, negative public sentiment toward MBK shows little change. Many remain skeptical of his sincerity as no specific scale or timeline for the funding was announced. Rep. Kim Hyun-jung of the Democratic Party of Korea criticized, "Not only is there no specific plan for the timing or method, but there is also no mention of damages other than payment arrears," adding, "Given MBK's surprise rehabilitation filing for Homeplus and their subsequent actions, their sincerity is highly suspect."
Even within Homeplus, the perception of MBK remains poor. On the 17th, the Homeplus branch of the Mart Industry Workers' Union stated, "We believe Chairman Michael Kim’s temporary response of contributing personal funds is a reluctant move made only when he could no longer avoid responsibility, as the Homeplus situation grew severe and social pressure intensified due to parliamentary summons, National Tax Service audits, and union opposition." The union added, "We strongly criticize MBK for pursuing other M&A activities while in the midst of a grave corporate rehabilitation process for Homeplus, and we demand that they immediately cease all M&A activities and focus on normalizing Homeplus."
Kang Woo-chul, chairman of the Mart Union, criticized, "We suspect this was announced to appease public opinion so that the fallout wouldn't affect other projects like the Korea Zinc dispute," adding, "Since acquiring Homeplus, MBK has failed to fulfill its promise of a 1 trillion won investment and has focused solely on recovering capital, such as by selling off profitable stores with high asset value."
Criticism is also coming from the private sector. The Citizens' Coalition for a Sound Society stated in a press release, "While MBK dismisses Homeplus's management failures as an unavoidable phenomenon following the decline of the offline hypermarket industry, it is in fact an inevitable result of MBK’s lack of management strategy and the moral hazard of stripping away prime assets." The group pointed out, "US politicians have warned that if MBK's acquisition of Korea Zinc succeeds, it could threaten the US critical mineral supply chain, increase the possibility of technology leaks, and negatively impact the defense industry."