The nation's top financial regulator said Tuesday that it has uncovered "circumstantial evidence" suggesting that MBK Partners was involved in the issuance of short-term bonds for troubled hypermarket chain Homeplus while simultaneously planning a court-led rehabilitation.

The Financial Supervisory Service has been conducting an investigation into the private equity giant MBK and its portfolio company Homeplus, the nation's No. 2 supermarket chain.

Homeplus is accused of issuing asset-backed short-term bonds worth 82 billion won ($55.7 million) on Feb. 25 — while allegedly anticipating its credit rating downgrade that was made public on Feb. 28. A week later, the retailer filed for a court-led rehabilitation on March 4.

“Determining when MBK and Homeplus became aware of the credit downgrade risk and when they decided to apply for rehabilitation is critical,” said Hahm Yong-il, senior deputy governor of the FSS, during a press briefing at the regulator’s headquarters in Yeouido, western Seoul, on Tuesday.

“Circumstantial evidence and findings contradict the claims. It is highly likely they were aware of the downgrade before the claimed date,” Hahm added. “We are in the process of figuring out whether they issued the bonds with the knowledge.”

The credit decline played a crucial role in Homeplus’ corporate restructuring application. At the time, the retailer announced it filed for rehabilitation as a preliminary response to the potential liquidity shortage from the downgrade.

Brokerage houses involved in the sale of the Homeplus bonds announced Tuesday they are to file a lawsuit against the retailer for fraud, leaving MBK out of the picture. Yet MBK’s linkage remains strong, Hahm stressed.

"Though Homeplus was the main agent in the bond sale, MBK is deeply involved as its Vice Chairman Kim Kwang-il is also an executive at Homeplus," he said, explaining that MBK could be held liable.

The FSS also criticized MBK for its lack of transparency in addressing the Homeplus crisis. While MBK had announced that its chairman Michael Byung-ju Kim would contribute his personal assets to support Homeplus suppliers affected by the liquidity crunch, no further details have been provided.

“Though MBK promised that Chairman Kim would use his assets to resolve the crisis, the company has yet to follow through with concrete plans. This raises doubts about its sincerity,” said Hahm. “MBK should fulfill its commitment and disclose the details to demonstrate accountability.”

Meanwhile, Homeplus continued to deny the allegations, claiming that the bonds were issued without any intention of pursuing court-led rehabilitation, as it had not yet been notified of the downgrade.

“The timeline of being aware of a credit rating downgrade and filing for corporate rehabilitation is as it has been explained before,” Homeplus said in a statement issued Tuesday.

"We will put in all efforts to normalize Homeplus through corporate rehabilitation and pay off the creditors, including the asset-back securities."

By Im Eun-byel (silverstar@heraldcorp.com)