Under a Homeplus rehabilitation plan, about 2.4 million Homeplus common shares held by MBK Partners were cancelled without compensation. Shareholder rights including management control also ended for the stake that MBK acquired with 2.5 trillion won.

The Seoul Bankruptcy Court and the industry said on Tuesday that, under the rehabilitation plan approved by the court on Sept. 2, about 2.4 million Homeplus common shares held by an MBK Partners special purpose company (SPC) were cancelled without compensation on Sept. 14.

The cancellation without compensation is a measure that extinguishes the shares without paying shareholders any compensation or consideration. As a result, MBK lost its 2.5 trillion won common share stake in Homeplus and all rights as a shareholder.

The cancellation also removed the burden in any future Homeplus mergers and acquisitions process for a new buyer to separately purchase the existing shares of the former controlling shareholder. It created a structure in which new funding can be used to normalise Homeplus instead of buying out existing shareholders.

MBK Partners has said it would accept the cancellation without compensation of all common shares it held to assume responsibility as a controlling shareholder and support management normalisation after the rehabilitation process began.

The aim is to give up shareholder rights so that a new buyer can inject fresh funds without the burden of the existing controlling shareholder’s stake.

Implementation of the rehabilitation plan did not proceed smoothly. After Homeplus failed to secure 200 billion won in emergency operating funds needed to implement the plan, the court decided in July to terminate the rehabilitation process, and it became unclear for a time whether the plan, including the share cancellation, would be carried out.

Later, Kim Byung-ju (김병주), chairman of MBK Partners, provided a joint and several guarantee for the full amount of a 200 billion won emergency operating loan provided by Meritz Financial Group, putting a financing plan in place.

The court cancelled its decision to terminate the rehabilitation process and approved the plan after it was passed at a meeting of interested parties on Sept. 2.

Separately from the share cancellation, MBK Partners and Kim are reported to be bearing a total financial burden of 600 billion won for the rehabilitation of Homeplus through contributions of personal funds, cash support, loans and joint and several guarantees.