Seoul: The financially troubled discount store chain Homeplus Co. announced that it submitted its rehabilitation plan to the bankruptcy court last month, receiving no objections from creditors regarding the proposal.
According to Yonhap News Agency, the rehabilitation plan is concentrated on restructuring Homeplus' business operations and initiating a merger and acquisition (M and A) process to find a new owner once the court approves the plan. The Seoul Bankruptcy Court requested that creditors, represented by Meritz Securities Co., review the rehabilitation program, to which they have raised no questions.
The program outlines strategies to secure emergency operating funds, close down dozens of underperforming Homeplus outlets, divest non-core business units, and relocate employees. A company official stated that to secure at least 300 billion won (US$205 million) in operating funds, private equity firm MBK Partners, Homeplus' largest shareholder, and Meritz will collaborate while also seeking loans from state-run lenders like the Korea Development Bank (KDB). The official did not specify whether MBK and Meritz would inject their own capital or rely on loans from financial institutions.
Homeplus has also planned to close 51 outlets over the next six years to enhance cash flow. Currently, the company operates 117 Homeplus locations across the nation. In October, telecommunications firm Harex InfoTech and property developer SnoMad submitted letters of intent (LOIs) to acquire Homeplus, which is entirely owned by MBK Partners. However, both companies failed to submit bids in the auction that concluded on November 26, the official noted.
MBK Partners acquired a 100 percent stake in Homeplus in 2015 from British retailer Tesco Plc for 7.2 trillion won. The retailer later faced financial difficulties amidst a prolonged downturn in the discount store industry, leading to court-led rehabilitation proceedings in March 2024. MBK Partners has faced accusations of offloading large volumes of short-term Homeplus bonds around the time the retailer's credit rating was downgraded.
On February 28 of the previous year, Korea Ratings reduced Homeplus' credit rating to "A3 minus" from "A3." Four days later, Homeplus filed for court-led rehabilitation.