It was later confirmed that MBK Partners proposed an additional credit provision of 100 billion won during the reevaluation process for Homeplus's credit rating downgrade. This is likely to serve as significant evidence supporting MBK's claim that it was unaware of the credit rating downgrade until it was notified on Feb. 25.
Financial authorities have determined that MBK and Homeplus management may have committed fraudulent unfair trading by hiding important information from investors while knowing about the credit rating downgrade and selling Redeemable Convertible Preferred Shares (RCPS). The matter has been referred to prosecutors.
According to investment banking (IB) industry sources on the 22nd, MBK proposed an additional mechanism for providing a credit provision of 100 billion won shortly after Homeplus's credit rating downgrade decision at the end of February. This is an added credit enhancement measure following the modification of RCPS redemption rights. MBK has indicated that this was part of efforts to improve Homeplus's financial structure.
To lower Homeplus's liability ratio, MBK sought to amend the articles of incorporation to grant redemption rights for RCPS exclusively to Homeplus and held an extraordinary shareholders' meeting on Feb. 27 to pass this amendment. Subsequently, at the beginning of March, it filed for a reevaluation while revealing a plan for a credit provision of 100 billion won, attempting to restore the rating.
The issue lies in the differing positions between MBK and the credit rating agency regarding whether MBK was aware of the possibility of a credit rating downgrade in advance. Credit rating agencies, including Korea Ratings, claim they clearly communicated the likelihood of a credit rating downgrade during the investor relations (IR) meeting in mid-February.
In contrast, MBK argues that it was completely unaware of the possibility of a downgrade until it received the notice on Feb. 25. A MBK representative stated, "If we had received prior notice of the possibility of a credit rating downgrade, we would not have opted for a method that takes time, such as amending the articles of incorporation, but would have taken a quicker and more proactive response."
MBK also asserts, "At the time of the IR meeting, we received no indication regarding the possibility of a credit rating downgrade, and if we had received such indication, the company would not have overlooked such a significant matter."
The proposal for a credit provision is expected to be used as a defensive argument by MBK, suggesting that it made sincere efforts to maintain the credit rating. Financial authorities have classified this matter as fraudulent unfair trading and have recently informed prosecutors about it. Future investigations by the prosecution are expected to focus on determining when MBK and Homeplus management became aware of the potential for a credit rating decline and whether there was intent to conceal this from investors.