The partitioning sale process of Homeplus's corporate supermarket (SSM) division has come to a halt. This is because MBK Partners, the private equity fund managing the major shareholder of Homeplus, has entered corporate rehabilitation processes due to difficulties in securing operating funds.
Once the corporate rehabilitation process begins, assets are temporarily frozen, making it impossible to proceed with separate sales.
According to the investment banking (IB) industry on the 4th, the partitioning sale process for Homeplus's SSM division "Homeplus Express" that had been pursued by Homeplus was halted. This has come about 8 months after Morgan Stanley was selected as the sale manager last year in the latter half, initiating separate sales.
The sale of Homeplus Express is seen as the first step in the complete sale of Homeplus, which was acquired by MBK Partners in 2015. Despite the repeated poor performance of Homeplus since the acquisition, Homeplus Express continued to grow.
Homeplus Express began in June 2004 and has secured more than 300 stores nationwide. Reportedly, last year's revenue was 1.2 trillion won, and the earnings before interest, tax, depreciation, and amortization (EBITDA) margin rate was 8%, drawing significant buyer interest.
The application for corporate rehabilitation by MBK Partners, the major shareholder of Homeplus, has led to the halt of the sale process. MBK Partners noted that difficulties in securing short-term operating funds for Homeplus are expected and applied for corporate rehabilitation to the Seoul Rehabilitation Court.
Homeplus has reportedly experienced difficulties in securing short-term liquidity since November last year. The company has been delaying payments to suppliers and providing delayed interest; however, concerns about unresolved settlements have recently emerged due to a decline in credit ratings.
Homeplus recorded operating losses of 133.5 billion won in 2021 (fiscal year), 260.2 billion won in 2022, and 199.4 billion won in 2023. A net loss of 574.3 billion won occurred only in the 2023 fiscal year, marking three consecutive years of deficits.
In fact, on the 28th of last month, Korea Credit Rating downgraded Homeplus's corporate bonds and short-term bills credit rating from A3 to A3-. Korea Credit Rating noted, "It is judged that significant performance recovery in the short term will not be easy."
MBK Partners plans to delay the sale of Homeplus Express until after concluding the corporate rehabilitation process. This is based on reducing the financial burden due to the deferral of financial debt repayment, aiming to accelerate the strengthening of core competitiveness.
An official from MBK Partners said, "Due diligence on buyers for Homeplus Express was ongoing, but we decided to halt related procedures due to concerns over deteriorating short-term liquidity," adding, "We will strive to complete the rehabilitation process as quickly as possible."