Injection of emergency funds essential to revive Homeplus: CEO
Homeplus co-CEO Joh Joo-yun takes an oath during a plenary session of the National Assembly in Seoul, March 18, 2025. Korea Times photo by Ko Young-kwon
An injection of emergency operating funds would help revive financially troubled discount store chain Homeplus, a company executive has said, dismissing any chance of liquidation.
Homeplus submitted its rehabilitation plan to the Seoul Bankruptcy Court last month, with creditors raising no objections to the proposal.
The program focuses on business reorganization and a merger and acquisition (M&A) process to find a new owner after court approval of the plan.
It also includes measures to secure emergency operating funds worth 300 billion won ($205 million), shut down dozens of loss-making outlets, offload non-core business units and relocate workers.
"There might be a crisis in one to two weeks from now as product volumes at Homeplus outlets have nearly halved compared to normal operating times. An urgent injection of emergency funds will help normalize the company's operations," Homeplus co-Chief Executive Officer (co-CEO) Joh Joo-yun told Yonhap News Agency in a recent interview.
The court and creditors represented by Meritz Securities view a cash injection as a positive approach, she said, while urging the labor union to cooperate for Homeplus' survival.
Homeplus hopes private equity firm MBK Partners, its largest shareholder, and Meritz Securities will each inject 100 billion won, while seeking loans worth 100 billion won from state-run lenders, such as the Korea Development Bank (KDB).
"MBK has provided 300 billion won in financial support to Homeplus and has pledged to inject an additional 200 billion won if a new owner is found," MBK Partners said in a press release.
Citing an urgent need for capital to pay wages, MBK said it decided to inject 100 billion won ahead of the completion of a merger and acquisition (M&A) process.
As part of its self-help efforts, Homeplus plans to shut down 51 outlets over the next six years to improve cash flow. The company currently operates 117 Homeplus outlets nationwide.
Asked whether there is a company interested in acquiring Homeplus, the co-CEO said, "There is no interested company for now. But companies will show interest if Homeplus improves its financial health through restructuring."
Joh is one of two court-designated managers, along with Kim Kwang-il, vice chairman of MBK Partners.
In October, two companies — telecommunications firm Harex InfoTech and property developer SnoMad — submitted letters of intent (LOIs) to acquire Homeplus, which is wholly owned by MBK Partners.
However, they did not submit bids in the auction that ended on Nov. 26.
MBK Partners acquired a 100 percent stake in Homeplus in 2015 from British retailer Tesco Plc for 7.2 trillion won.
The retailer later became financially strained amid a prolonged downturn in the discount store industry and entered court-led rehabilitation proceedings in March 2024.
MBK Partners has been accused of selling large volumes of Homeplus' short-term bonds around the time of the retailer's credit rating downgrade.
On Feb. 28, Korea Ratings downgraded Homeplus' credit rating to A3 minus from A3. Four days later, Homeplus filed for court-led rehabilitation.