Homeplus plans M&A ahead of rehabilitation as liquidation value exceeds going-concern value

Homeplus headquarters in Seoul's Gangseo District, April 28 / Yonhap

Homeplus' liquidation value exceeds its going-concern value by over 1.2 trillion won ($883 million), according to a financial investigation released Thursday by the court-appointed accounting firm.

In response, the major supermarket chain decided to pursue mergers and acquisitions (M&A) ahead of approval of its rehabilitation plan.

Homeplus filed for corporate rehabilitation with the Seoul Bankruptcy Court on March 4, citing a credit rating downgrade.

Samil PwC, the country's largest accounting firm and the court-appointed investigation committee, conducted the review.

Earlier in the day, the firm submitted its report to the court and held a briefing for creditors at Homeplus headquarters to present its findings and outline the next steps.

The report cited three main factors leading to Homeplus' rehabilitation filing — rising fixed costs, the impact of the COVID-19 pandemic coupled with a shift to online retail, and liquidity risks stemming from a credit rating downgrade.

Homeplus' assets were reported at 6.8 trillion won, with liabilities totaling 2.9 trillion won, indicating a significant surplus.

The going-concern value was estimated at approximately 2.5 trillion won, while the liquidation value was assessed at around 3.7 trillion won — higher than the going-concern value due to the roughly 4 trillion won gap between assets and liabilities.

Based on the investigation committee's recommendation, Kim Kwang-il, a partner at MBK Partners and co-CEO of Homeplus along with Joh Ju-yeon, plans to request court approval to proceed with M&A transactions prior to the approval of the rehabilitation plan.

MBK Partners is a private equity firm and the largest shareholder of Homeplus.

However, the executives dispute the committee's assessment, asserting that the going-concern value exceeds the liquidation value, and intend to submit an official opinion to the court reflecting their position.