Homeplus to see $168 cash inflow after MBK’s victory over Tesco MBK-owned supermarket chain will use the cash for investment in new businesses

Translated by Ryu Ho-joung 공개 2021-10-19 08:08:26

이 기사는 2021년 10월 19일 08:04 더벨 유료페이지에 표출된 기사입니다.

Homeplus, the South Korean supermarket chain owned by MBK Partners, will see a cash inflow of 119 million pounds ($168 million) after the private equity firm won the legal battle against the retailer’s previous owner Tesco.

Tesco was recently ordered by an international arbitration court to pay back 119 million pounds to MBK Partners, a ruling that marks the private equity firm’s victory in its six-year dispute with the UK supermarket giant.

MBK Partners in 2015 acquired Homeplus from Tesco for approximately 7.2 trillion won ($6.1 billion). The private equity firm has since fought a legal battle with the British retailer over its takeover price.

The money returned by Tesco will be provided to Homeplus, boosting the company’s cash reserves. This will also likely help its chief executive Lee Jae-hoon, who took over in April this year, lead an effort to improve the company’s financial position.

Homeplus has focused on reducing its debt burden in recent years. It spent nearly 120 billion won to pay interests alone in 2020, much higher than a net profit of 88.3 billion won in the same period.

The supermarket chain recorded gains of some 630 billion won last year from the sale of four stores. This came after the company previously raised 830 billion won by selling another four stores to repay its debt.

As a result, Homeplus’ short-term and long-term debt reduced to 166.4 billion won and 1.58 trillion won, respectively, at the end of 2020, down by 14.8% and 25.4% year-over-year. The debt to equity ratio also fell to 725%, down by 133 percentage points from a year earlier, although it remained relatively high.

Homeplus is stepping up efforts to transform its business model to focus more on online channels. The additional cash of 119 million pounds is expected to give the company increased financial flexibility to ramp up such efforts.

“We will use the money paid by Tesco for working capital and investment in new businesses,” an official at Homeplus said. “We also plan to renovate stores and hire more staff this year.” (Reporting by Seon-ho Kim)
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