The situation for Meritz Financial Group, which lent trillions of won to Homeplus, one of the three major discount chains in the country, has become complicated. Although Homeplus was in a position to recover funds at any time by sufficiently obtaining collateral even if it underwent the rehabilitation process, executing the security rights immediately has become difficult. The nearly 20,000 Homeplus employees, as well as the political community, are paying attention, so the movements of Meritz Financial Group are being restrained.
When entering corporate rehabilitation procedures, creditors cannot arbitrarily exercise their security rights, but Meritz Financial Group is in a different situation. It has structured to be able to exercise its security rights even in special circumstances like rehabilitation. Currently, the owner of the collateral is not Homeplus but a real estate trust company that has entered into a trust agreement with Homeplus.
Thanks to this, even if Homeplus applies for rehabilitation, Meritz Financial Group can sell all the stores if it chooses to do so. This is one reason why the group is receiving evaluations of 'doing extraordinarily well' in the industry.
According to the financial investment industry on the 13th, Meritz Financial Group is observing the situation without deciding when to dispose of the land seized as collateral, which amounted to 1.2 trillion won in loans to Homeplus last May. Initially, there was a prevalent outlook that Meritz Financial Group, known for being resolute on financial matters, would immediately dispose of the collateral, but that has not been the case.
The seized collateral consists of 62 Homeplus stores across the country, with a real estate appraisal value of about 4.8 trillion won as of last year. A Meritz Financial Group official commented on the execution of the collateral, saying, 'There are many perspectives on Homeplus from the outside.'
When looking at the situation so far, it appears that Meritz Financial Group, which had been doing well, has stumbled with its investment in Homeplus. The group had employed a strategy of charging high interest rates while extending help to financially troubled corporations, but the side effects have become apparent.
Last year, when a liquidity crisis arose at Lotte Construction, Meritz Financial Group provided 900 billion won as a priority. At that time, the interest rate was 12% and through this transaction, Meritz Financial Group made about 100 billion won in profit. Last year, when Korea Zinc faced a threat to its management rights, it took on a private bond of 1 trillion won while securing a 7% interest rate.
However, as the Homeplus crisis has spread to the National Assembly, Meritz Financial Group has found itself in a situation where it cannot dispose of the collateral carelessly.
On the 18th, the National Assembly's Political Affairs Committee plans to hold a general meeting and conduct an urgent inquiry related to Homeplus. The committee intends to call individuals including Kim Byung-joo, chairman of MBK Partners; Kim Kwang-il, vice chairman of MBK Partners and co-representative of Homeplus; Jo Joo-yeon, co-representative of Homeplus; Geum Jeong-ho, president of Shinyoung Securities; and Kang Kyung-mo, vice chairman of the Homeplus Merchants Association.
MBK Partners is the largest shareholder of Homeplus, while Shinyoung Securities is the underwriting securities firm that has securitized card payment receivables. If Meritz Financial Group were to exercise its security rights, related individuals such as Chairman Jo Jeong-ho may have to appear in the National Assembly.
Meritz Financial Group finds itself in a position where it cannot sell all its stores without considering the backlash. This is because it could be identified as a major culprit in damaging Homeplus, following MBK Partners.
Even if it were to list properties for sale, it would be difficult to find buyers immediately. A purchaser of the Homeplus property would undoubtedly pursue development profits rather than rental income from the Homeplus stores, but with nearly 20,000 employees and local public opinion, as well as political forces to consider, it cannot proceed with development. Local governments are also unlikely to allow zoning changes.
As a result, Meritz Financial Group has effectively seized assets that it cannot dispose of right now. Although the group has consistently performed well, this time it can be seen as being in a bind.
Meanwhile, the Financial Supervisory Service (FSS) is reporting that the soundness of financial companies will not be affected in relation to Homeplus. On the 3rd of this month, Lee Bok-hyun, the head of the FSS, met with reporters and stated, 'The exposure of financial institutions is at a manageable level,' adding that, 'Given the nature of the retail industry, where there are various real estate assets, it is not expected that the financial sector will face large-scale losses.'