The labor-management feud at South Korea’s hypermarket chain operator Homeplus escalated Sunday, with union members accusing its majority shareholder MBK Partners of profiteering at the expense of the company.

The controlling private equity firm denied having done so, accusing the union of misleading the public.

According to the labor union, MBK Partners has pulled 1.9 trillion won ($1.6 billion) out of Homeplus hypermarkets through the sale of its properties and brought in 1.2 trillion won in the name of dividends “to hollow out Homeplus.”

But according to filings, MBK Partners dividend payouts for the past five years totaled 107 billion won -- 21.4 billion won each year. The filings also show that the labor union’s quoted figure of 1.2 trillion won referred to the amount that was transferred to its parent Homeplus Stores to reduce its leverage.

The PEF also added that instead of “profiteering,” it had injected the disputed 1.9 trillion won into repaying Homeplus Stores’ leverage. The sales proceeds did not come by divesting its stores, but by carrying out a sales and leaseback scheme, it said

The dispute highlights the nation’s largest PEF’s ongoing move to reduce debt from highly-leveraged $6.1 billion buyout deal in 2015, in the face of challenges posed by the rise of e-commerce.

Upon acquiring the business, MBK vowed to invest 1 trillion won and nurture the brand into the nation’s top-tier retail player. The unionists say the PEF failed to abide by its word by disposing of stores and laying off some 4,000 employees through restructuring, while MBK said it continued to invest in the company to address the major changes in the retail industry, by launching fulfillment centers and a mobile on-demand delivery app.

Homeplus Holdings’ annual net profit as of February 2019 came to 3.2 billion won, down 96 percent on-year. The PEF sought to cash out up to 1.7 trillion won last year through a listing of a real estate investment trust that invests in 51 Homeplus stores across Korea, but canceled the plan during the institutional tranche of its initial public offering.

In October, MBK Partners opted to refinance 2.2 trillion won debt to repay the leverage of Homeplus and its parent firms.

By Son Ji-hyoung (consnow@heraldcorp.com)