Meritz Financial is considering a 100 billion won short-term bridge loan for Homeplus, but negotiations between the two parties remain at an impasse. Homeplus has proposed alternatives in an effort to reach an agreement, but analysts believe finding common ground is unlikely without a significant change in attitude from MBK Partners, the major shareholder.
According to the financial investment industry on May 18, Homeplus suggested establishing a subordinate income right on trust real estate as an alternative to the joint guarantee condition demanded by Meritz from MBK Partners and its management. This proposal aims to offer additional real estate collateral instead of accepting the joint guarantee.
Currently, most of Homeplus's key assets are tied up in trust collateral for senior financial institutions, including Meritz Financial, its largest creditor. This situation has effectively blocked Homeplus from securing additional funds through its assets. The investment banking (IB) sector has dismissed Homeplus's offer of subordinate income rights as a "meaningless deception," arguing that it does not provide any additional safety measures given that Meritz already holds senior control over the assets.
An IB industry insider stated, "Given that Meritz already has senior control over the assets, offering subordinate rights on the same assets as collateral for a new loan of 100 billion won does not add any financial safeguards. It essentially asks Meritz to take on risk without a solid joint guarantee from MBK, which could lead to potential breaches of duty."
The two sides are also at odds over the proposed interest rate of 6%. Homeplus argues that the short loan term makes the 6% rate burdensome, but market perspectives differ. Homeplus's liquidity crisis and financial situation have deteriorated significantly. A market observer noted, "MBK Partners, as the largest shareholder, bears the greatest responsibility for Homeplus's management decline, yet they are unwilling to take on any additional risks such as joint guarantees. Asking creditors, who are considering emergency support to prevent a liquidity crisis, to lower the interest rate to market levels of 6% is merely shifting the burden onto financial institutions."
The uncertainty surrounding the sale of Homeplus Express, which is intended to fund the bridge loan repayment, is also a factor in Meritz's firm stance. Homeplus recently signed a main contract for the business transfer with Harim and is currently undergoing detailed due diligence. However, there is a possibility that the contract could be terminated during the due diligence process or that the sale could ultimately fall through before the final payment is made.
Meritz stated, "We are fully aware of the potential impact on employment and have been doing our utmost to consider emergency funding support. However, the performance guarantee is necessary because the sale of Homeplus Express is within the controllable scope of the major shareholder, MBK, to prevent breaches of duty and persuade shareholders."
* This article has been translated by AI.
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