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Byung-Joo Kim, Chairman of MBK Partners. (Photo courtesy of MBK Partners) |
[Alpha Biz= Paul Lee] Byung-Joo Kim, Chairman of MBK Partners and the majority shareholder of South Korean retail chain Homeplus, has stepped in with a personal loan guarantee of KRW 60 billion (approximately USD 44 million) as the company undergoes court-led restructuring. However, industry experts say the gesture is largely symbolic, given Homeplus’s enormous debt load.
According to sources in the investment banking and retail industries on Sunday, private equity firm Curious Partners—specialized in distressed asset investments—will provide a Debtor-in-Possession (DIP) loan of KRW 60 billion to Homeplus. Chairman Kim has personally guaranteed the loan, meaning he will be liable if Homeplus defaults. The loan is reported to have a three-year term and an annual interest rate of 10%.
DIP financing is a special type of funding used during corporate rehabilitation proceedings and requires court approval. Given that the loan is aimed at paying small business suppliers, approval is likely. However, since DIP loans are granted repayment priority, existing creditors may be pushed back in line, potentially fueling opposition when the final restructuring plan is reviewed.
Kim had previously injected personal funds into Homeplus last month, although the amount has not been disclosed.
Still, critics argue that the KRW 60 billion guarantee is merely a drop in the bucket compared to Homeplus’s total debt, which amounts to roughly KRW 2.7 trillion (about USD 2 billion). Homeplus’s creditor filing lists four secured claims totaling KRW 26.9 billion and 2,894 general claims amounting to KRW 2.67 trillion.
Furthermore, because the DIP loan will ultimately be repaid by Homeplus, some analysts argue that it doesn't constitute a true commitment of Kim’s private assets—raising questions about the sincerity and effectiveness of the intervention.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
