Photo courtesy of Yonhap News

 

[Alpha Biz= Paul Lee] Lotte Card said on February 17 that its decision to classify approximately KRW 70 billion in exposure to Homeplus as an estimated loss was a precautionary risk management measure rather than a reflection of actual default.

In a statement, the company said the accounting classification was a “conservative step taken to prepare for uncertain market conditions,” emphasizing that it does not necessarily indicate realized losses.

According to data cited by lawmaker Lee In-young of the National Assembly’s Political Affairs Committee, Lotte Card reclassified KRW 79.3 billion worth of Homeplus-related receivables as estimated losses at the end of last year. A significant portion—about KRW 60 billion—was tied to corporate purchasing cards used by Homeplus to settle payments with suppliers.

Lee criticized the move, arguing that Lotte Card had effectively absorbed unpaid obligations from Homeplus. He also claimed that MBK Partners, the controlling shareholder of both companies, may have used Lotte Card to support Homeplus amid financial difficulties, potentially increasing credit risk at the card issuer.

Both Homeplus and Lotte Card are majority-owned by MBK Partners.

 

 

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