FSS Concludes Disciplinary Review of MBK over 'Homeplus Case'... "Sanction Level Not Disclosed"
The Financial Supervisory Service (FSS) has completed a disciplinary review regarding allegations of breach of investor interests and issues surrounding the acquisition of Homeplus by private equity fund (PEF) manager MBK Partners.
On July 2, the FSS announced to the press corps that it had discussed and concluded the proposed actions from its inspection of MBK Partners at the 14th session of the Disciplinary Review Committee.
An FSS representative stated, "Based on the results of the review, we will organize the details, including the level of sanctions, and submit a recommendation to the Financial Services Commission (FSC)." The official added, "As the disciplinary process is still ongoing, it is difficult to confirm the specific outcomes or the level of sanctions at this time."
Typically, if the FSS decides on sanctions of institutional warning or higher, the decision is finalized through the Securities and Futures Commission and the Financial Services Commission.
In November of last year, the FSS issued a preliminary notice of severe sanctions, including suspension of duties, to MBK Partners. However, debates over legal interpretations of the case led to a suspension of discussions.
The key issue is whether MBK Partners acted unlawfully by changing the terms of redeemable convertible preferred shares (RCPS) and waiving redemption rights through a special purpose company (SPC) established during the acquisition of Homeplus. The FSS has maintained that this reduced the likelihood of investment recovery for limited partners (LPs) such as the National Pension Service, thereby undermining their interests.
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This conclusion of the review was reached just one day before the deadline for the Seoul Bankruptcy Court to approve Homeplus's rehabilitation plan. Homeplus requires additional funding of approximately 200 billion won to implement the rehabilitation plan, but the main shareholder MBK Partners and the largest creditor Meritz Financial Group are engaged in a dispute over responsibility for injecting these funds.
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