MBK to Repay 'Homeplus Investment RCPS' to National Pension Service?

Most Senior Acquisition Financing and Majority Repaid

[Asia Economy Reporter Park So-yeon] MBK Partners, a private equity fund (PEF) management company, is starting discussions on the redemption of the National Pension Service’s redeemable convertible preferred shares (RCPS), which had been postponed to repay the senior debt acquired through the acquisition of Homeplus.

According to the investment banking (IB) industry on the 2nd, MBK Partners has mostly completed repayment of the approximately 2.5 trillion KRW senior acquisition financing raised during the Homeplus acquisition and plans to proceed with the redemption of the National Pension Service’s RCPS. Originally, the National Pension Service’s RCPS was valued at around 600 billion KRW, but due to being subordinated to the senior debt repayment, the principal and interest reportedly increased to about 900 billion KRW. An IB industry official hinted, "Most of the senior acquisition financing has been repaid, making it possible to redeem the RCPS invested by the National Pension Service," adding, "Discussions with the National Pension Service are planned."

At the time of the Homeplus acquisition in 2015, MBK Partners utilized a co-investment fund funded by domestic and international institutional investors in addition to a blind fund. The National Pension Service also invested approximately 600 billion KRW in RCPS, reportedly guaranteed a 9% return. As the repayment was delayed due to the senior debt, the principal and interest rapidly increased, putting significant pressure on MBK. The maturity of the RCPS was October of the year before last. The maturity was extended as the debt was not repaid.

When MBK acquired Homeplus in 2010, it assumed total debt of about 5 trillion KRW, including approximately 2.5 trillion KRW of existing debt owed to Tesco and about 2.5 trillion KRW of acquisition financing. The existing Tesco debt was converted into general financial sector debt. It is reported that about 3 trillion KRW of the total 5 trillion KRW debt has been resolved so far.

MBK has been securing repayment funds through store sales. After the Homeplus REIT was canceled in early 2019, they began actively selling stores. Some were sold for land value, and others involved investing in development projects on the respective sites to seek profits. Homeplus selected accounting firms and others as sales advisors and sold stores such as Ansan, Tanbang, Dunsan, and Daegu locations. Due to the real estate boom and abundant liquidity, each store was valued at several hundred billion KRW.

Additional store sales are currently underway. MBK and the sales advisory firm Deloitte Anjin LLC are conducting a bidding process on the 2nd for the sale of Homeplus Haeundae store. The premise is that after Homeplus sells the store, a real estate developer completes development of the site, and Homeplus re-enters the location.

This content was produced with the assistance of AI translation services.