MBK Partners (MBK): “Golfzon County sale to proceed as agreed ... Golfzon Holdings spurned its chance to buy first” [fn Market Watch]

[Financial News] MBK Partners has directly rebutted Golfzon Holdings’ objections to the sale of Golfzon County. The drag-along right, which allows the company to be sold together with control if the IPO falls through, is a clause Golfzon Holdings itself agreed to. MBK Partners says Golfzon Holdings also chose not to exercise its right of first offer (ROFO).
According to investment banking (IB) industry sources on the 29th, MBK Partners said in a statement that day, “Golfzon Holdings’ claims distort the essence of the contract the two companies voluntarily entered into in 2018 and are a groundless argument that denies the principle of competitive bidding.”
In 2018, MBK Partners invested 114 billion won in Golfzon County through a special-purpose company (SPC), Korea Golf Infrastructure Investment, and later participated in four rights offerings. MBK Partners said the arrangement “made the guarantee of management control conditional on a successful IPO.” It said the investment agreement explicitly provided that, if the listing did not go ahead, Golfzon Holdings’ stake could also be bundled into a sale to a third party. It therefore argued that calling a sale conducted according to the contract “one-sided” amounted to denying the contract itself.
Golfzon County applied for a preliminary listing review on the securities market in April 2022 but withdrew its listing plans as investor sentiment froze amid rising interest rates. MBK Partners criticized Golfzon Holdings, saying, “It is market convention for a strategic investor (SI) to pursue an IPO and help a financial investor (FI) exit,” and, “After the first listing attempt fell through, Golfzon Holdings merely expressed its desire for an IPO and did no actual work to pursue one.”
The two sides also disagree over the opportunity to buy first. Before beginning an external sale process, MBK Partners formally offered Golfzon Holdings the first opportunity to acquire the company. Golfzon Holdings, however, only replied that it wanted Golfzon County to pursue an IPO, without making a price offer, MBK Partners said. Given that financial authorities and the Korea Exchange (KRX) have been enforcing revised listing rules since last August that in principle prohibit the dual listing of a parent and its subsidiary, MBK Partners views a Golfzon County IPO as an alternative that would be virtually impossible to realize.
Golfzon Holdings expressed interest in acquiring the company at the last minute of the final bidding round, as the competitive bidding process was nearing completion. But it was eliminated after offering terms substantially less favorable than The Siena Group’s on both price and deal structure. MBK Partners emphasized, “It is only natural for us, as the seller and trustee, to choose the best terms.”
In response to Golfzon Holdings’ objections to the lease agreements for four golf courses, MBK Partners said they were “contracts lawfully formed through the two companies’ business judgment and agreement in 2018 and maintained for years.” It added, “Claiming that the contracts are unfair immediately after losing the bidding war is a classic case of self-contradiction,” and warned, “We will hold those responsible strictly accountable for distorting the facts and breaching the contract.”
MBK Partners previously appointed Morgan Stanley and Samjong KPMG as sale advisers and proceeded with the sale. On the 27th, it signed a stock purchase agreement (SPA) with a consortium of The Siena Group and CL Asset Management to sell its entire 100% stake in Golfzon County. The company’s enterprise value is approximately 1.8 trillion won; after deducting net debt of about 950 billion won, the equity value is around 850 billion won. Meritz Securities will handle about 500 billion won in acquisition financing. Golfzon County recorded revenue of 285.2 billion won and operating profit of 81.1 billion won last year.
Golfzon Holdings says the sale is “one-sided and contrary to the purpose of the investment” and is considering all options, including legal action. The side of Golfzon Holdings’ largest shareholder had earlier pursued a voluntary delisting through a tender offer at 6,700 won per share, but withdrew the plan last September after the share price rose above the offer price.

[email protected] Kang Gu-gwi Reporter