'Painful self-rescue efforts lay groundwork for recovery'

Homeplus again asks top creditor for emergency financing

A Homeplus store in Seoul [Herald DB]
A Homeplus store in Seoul [Herald DB]

Homeplus on Tuesday called on its largest creditor, Meritz Financial Group, to provide emergency financing, saying it had laid the groundwork for recovery through sweeping restructuring and other drastic self-rescue measures.

In a press release, the hypermarket operator said it had incorporated a strengthened structural overhaul plan and a merger and acquisition strategy into a revised rehabilitation plan recently submitted to court. "We have focused on improving business performance and profitability so that potential acquirers can take interest," the company said.

As part of those efforts, Homeplus cut its hypermarket store count from 126 to 67. It also negotiated with landlords to reduce rental costs by an average of 20 to 40 percent. Its supermarket unit, Homeplus Express, was sold to NS Shopping. Through this process, the company's workforce shrank from roughly 18,000 employees to around 9,000.

Homeplus said the measures go beyond simple cost-cutting, describing them as steps to raise the likelihood of a successful acquisition and maximize creditor recovery. "If the M&A is successfully completed, all stakeholders — including creditors, suppliers, tenants and employees — can expect a better outcome," the company said.

However, Homeplus said securing operating funds to sustain stable operations until the sale is finalized is its most pressing need. The company estimated it requires approximately 200 billion won ($129 million) in emergency operating funds to cover product procurement, supplier payments and store operations.

Homeplus has asked Meritz and other creditors to provide the emergency operating funds, which would serve as bridge financing to maintain the rehabilitation process and complete the acquisition.

"Since the start of rehabilitation proceedings, we have laid the groundwork for recovery through painful self-rescue efforts, including business restructuring and cost reduction," a company official said. "We are now doing everything we can to improve the prospects for normalization through an M&A."


spa@heraldcorp.com