MBK, After Homeplus, Now in Full-Scale Battle with Golfzon Holdings Over Sale and Unfair Contract

*This content was translated by AI.View Original

Global private equity firm MBK Partners (hereinafter MBK) has come into direct conflict with second-largest shareholder Golfzon Holdings over the sale process of Golfzon County. As legal countermeasures and rebuttals continue between the two sides regarding attempts to recover investment funds (exit) following the failure of an initial public offering (IPO) and the fairness of a lease agreement signed at the time of the initial investment, the situation is expanding into a controversy over "quick profit-taking."

In a statement released on the 28th, Golfzon Holdings stated, "We cannot agree to MBK's unilateral push to sell Golfzon County, which goes against the original intent of the investment," and added, "We will take all measures, including legal action, to protect legitimate rights and management control, and to rectify unfair contract terms."

Golfzon County, South Korea's largest golf course operator, is held 68.4% by MBK through a special purpose vehicle (SPV) and 31.6% by Golfzon Holdings.

On the 27th, MBK signed a share purchase agreement (SPA) with The Ciena Group for the acquisition of management control. MBK is pushing for the sale of 100% of the shares, including Golfzon Holdings' stake, by exercising the drag-along right specified in the shareholders' agreement.

The first point of conflict concerns responsibility for the IPO that was promoted but ultimately failed. Golfzon Holdings claims that MBK promised to complete an IPO and guarantee management control but failed to fulfill these promises and instead moved toward a sale. In response, MBK countered that at the time of the 2018 contract, a drag-along clause was explicitly included to prepare for the possibility of an IPO failure, and a preemptive right was also guaranteed, but Golfzon Holdings did not actively pursue the acquisition.

A larger controversy has emerged over the golf course lease agreement signed at the time of the initial investment. Specifically, it is alleged that MBK received preferential treatment in the form of "low rent" and "zero security deposit" for four golf courses (Anseong H·W, Seoun, Cheongtong) owned by a subsidiary of Golfzon Holdings.

Golfzon Holdings stated, "By abusing a poison pill clause that allows only the lessee to unilaterally extend the contract, they abnormally inflated Golfzon County's operating profit," and claimed that MBK ignored demands for rent normalization over the past seven years due to interest rate hikes and other factors. In response, MBK dismissed these claims, stating, "The relevant contract was legally established based on business judgment and mutual agreement between the two companies at the time of investment attraction."

Industry observers point out that such behavior by MBK is a continuation of its track record of "pursuing short-term performance and destroying symbiosis" seen in past cases such as Homeplus' sale-and-leaseback, squeezing BHC franchisees, and the hostile M&A of Korea Zinc. In fact, MBK continues to face controversies at various invested companies, including recent restructuring conflicts with the Homeplus labor union and issues regarding high dividends and employment at Osstem Implant.

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*This content was translated by AI.View Original