[비즈한국] MBK Partners (MBK) Chairman Kim Byung-ju is facing mounting pressure from political circles and investigative authorities. Public opinion is also unfavorable, with ongoing criticism that Chairman Kim bears responsibility for Homeplus entering court receivership. While Chairman Kim needs to normalize Homeplus, it is proving difficult in the current situation, and it remains questionable whether he even has the will to do so. Although he expressed his intention to contribute personal funds back in March, there has been no news of such a contribution even three months later.
The Democratic Party of Korea, now the ruling party, has long held a negative stance toward MBK. In April, lawmakers from the Democratic Party of Korea, the Rebuilding Korea Party, and the Social Democratic Party who serve on the National Assembly’s National Policy Committee stated, "As the de facto majority shareholder, Chairman Kim Byung-ju must attend the National Assembly hearing to clearly state his position on the current situation and propose responsible measures," adding, "The National Assembly will monitor this situation until the end and will not hesitate to hold him fully accountable to ensure that the public is never deceived again."
National Assembly Speaker Woo Won-shik stated on May 22, "MBK, the largest private equity fund in Korea, should not evade its responsibilities and must take necessary measures." He added, "Various lawmakers, including Rep. Min Byung-duk, are making efforts to resolve the situation, and the National Assembly will continue to stand in solidarity with you all." Although Speaker Woo became an independent upon taking his position, he is expected to return to the Democratic Party of Korea once his term as Speaker ends, given his background.
Investigative agencies are also pressuring Chairman Kim Byung-ju. On May 17, the Seoul Central District Prosecutors' Office’s Anti-Corruption Investigation Department 3 executed a search and seizure warrant against Chairman Kim. MBK is accused of selling Asset-Backed Short-Term Bonds (ABSTB) to investors, causing them financial harm, even while Homeplus's credit rating was expected to be downgraded. The prosecution subsequently imposed a travel ban on Chairman Kim.
Public sentiment is also turning sour. The credit rating industry views MBK's management style as the root cause of the Homeplus crisis. Seo Min-ho, a senior analyst at Korea Investors Service, commented, "From the moment of MBK’s acquisition, Homeplus bore the actual repayment obligations for acquisition financing and redeemable convertible preference shares. In response to the heavy burden of split repayments and financial costs relative to its cash-generating ability, the company made limited capital investments and continued to sell off stores." He assessed that "the resulting vicious cycle—weakened competitiveness in the market and increased rental burdens—has led to a decline in profitability."
Chairman Kim Byung-ju can only find a breakthrough by preparing comprehensive measures for Homeplus. If MBK were to acquire another domestic company without resolving the Homeplus crisis, it would likely face backlash from the domestic industry, potentially making future investment activities in Korea difficult.
The retail industry predicts that selling Homeplus will not be easy for the time being. MBK acquired Homeplus in 2015 for 7.2 trillion won. To realize a profit, they would need to sell it at an even higher price. However, since Homeplus has been recording losses for years, the likelihood of a high-price sale is low. It is known that MBK has attempted to sell Homeplus several times over the past few years, only to fail each time.
A retail industry official analyzed, "It would be difficult for Homeplus to change its fortunes now, as it started preparing for online shopping far too late. From the government's perspective, large hypermarkets are not considered core infrastructure, so it seems unlikely that public funds will be injected. It is unfortunate, but it appears the company will eventually head toward liquidation."
It is not easy for Homeplus to survive on its own. While the retail industry trend has shifted to online shopping, Homeplus has failed to establish a significant presence there. It does not have a commanding presence offline, either. Homeplus currently operates 126 stores nationwide, of which 58 are owned by the company and the remaining 68 are leased. Over the past few months, Homeplus has been negotiating rent reductions with landlords for the 68 leased stores. While rent negotiations have concluded for 41 of these locations, it is reported that there are significant disagreements with landlords at the remaining 27.
On the 4th, the Homeplus branch of the Korean Mart Workers' Union (under the Korean Confederation of Trade Unions' Service Federation) pointed out, "Homeplus is pushing to close 36 stores (including 9 that are currently slated for closure)," adding, "This is not merely a store closure; it is a serious issue that threatens the survival of the local economy, workers, and small and medium-sized business owners."
However, Homeplus recently stated that there has been progress in rent negotiations. On the 5th, Homeplus announced, "We expect to reach agreements on adjusting rent and contract conditions for 7 of the 27 stores for which we had issued termination notices," and added, "Even if some stores ultimately fail to reach an agreement, we will guarantee the employment of all staff members currently working at those locations."
There are strong opinions that even if Homeplus reaches rent agreements for these 7 stores, it will be nothing more than a short-term fix. This is because if Homeplus fails to turn a profit, the likelihood of further store closures remains high. In the current climate, finding new investors for Homeplus is also a difficult task.
Chairman Kim Byung-ju had promised to contribute personal funds once the controversy erupted. On March 16, MBK stated, "Chairman Kim Byung-ju will provide financial support to ensure that payment is quickly made to small business partners, who are expected to face particular difficulties." However, no specific schedule or method for the personal contribution was disclosed.
Three months have passed since then, yet there has been no notable action from Chairman Kim's side. If the promise to provide personal funding is not kept, public opinion against Chairman Kim will inevitably deteriorate further. BizHankook contacted an MBK public relations executive to request a response regarding this matter but received no reply.