Homeplus Repeats Request for Bridge Loan; Meritz Says MBK Must Provide Performance Guarantee

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[The Financial News] Homeplus has again asked Meritz Financial Group for bridge loan support backed by the proceeds from the sale of Homeplus Express. It also proposed additional collateral, including a performance guarantee from Vice Chairman Kim Kwang-il, but Meritz said a responsible guarantee from MBK Partners and Chairman Michael ByungJu Kim is needed.
On the 21st, Homeplus said it had again asked Meritz Financial Group to lend it the working capital it will need for about the next month as a bridge loan, using the expected proceeds from the sale of Homeplus Express, its supermarket division, as collateral.
Homeplus stressed the need for funding support, saying it had proposed a performance guarantee from Vice Chairman Kim Kwang-il along with additional collateral measures. "Today is the May payday, but only part of April's wages have been paid, and we are also facing major difficulties in supplying products," the company said. "We have presented every possible measure we can offer at this point, and we hope Meritz will review it positively and act immediately."
Meritz, however, said the measures Homeplus proposed were not enough. A Meritz official said, "The fact that the performance guarantee is being offered only by Vice Chairman Kim Kwang-il, the Homeplus administrator, rather than by the major shareholder MBK Partners, can only be seen as meaning that the major shareholder and Chairman Michael ByungJu Kim do not intend to take responsibility." The official called it "an irresponsible and unacceptable proposal."
Meritz said a direct performance guarantee from MBK is absolutely necessary. The official noted, "Since the sale of Express is an issue within the control of MBK, the major shareholder's performance guarantee for the bridge loan is the minimum necessary step to prevent breach of trust and persuade shareholders."
The official added, "Although MBK has been responsible for Homeplus's deteriorating management, it is shifting the burden onto creditors. This goes beyond the Homeplus crisis and seriously undermines market order."
Earlier, Meritz had been reviewing the possibility of providing Homeplus with a very short-term working capital loan with a maturity of two to three months, while demanding conditions such as immediate early repayment once the Express sale proceeds come in.
clean@fnnews.com Lee Jeong-hwa Reporter