Homeplus Co. submitted a rehabilitation plan to the Seoul Bankruptcy Court and decided to begin full-fledged talks with its creditors on the details. Homeplus Co. at the end of last year submitted a "structure-innovation-type rehabilitation plan" that combines restructuring and post-approval mergers and acquisitions (M&A).
Homeplus Co. on Jan. 9 said, "In the initial opinions from creditors on the court-requested submission of the rehabilitation plan, no objections were raised to receiving and reviewing the structural innovation rehabilitation plan."
Homeplus Co. said, "It appears that consensus has formed among creditors that structural innovation is needed for Homeplus Co.'s sustainability, and going forward, the company, the labor union, and the creditors will conduct full-fledged reviews and consultations on the details of the rehabilitation plan."
The rehabilitation plan includes: ▲ measures to secure emergency operating funds ▲ plans to dispose of underperforming stores to improve cash flow ▲ plans to improve business viability by overhauling fundamentals. If the plan is carried out without a hitch, Homeplus Co.'s consolidated operating profit (EBITDA) is expected to swing to a surplus of about 143.6 billion won.
However, differences of opinion could arise over how to raise 300 billion won in emergency operating funds; the sale of self-owned stores (10 over the next three years) and the express institutional sector for cash flow improvement; the plan to dispose of underperforming stores to improve business viability (41 over the next six years); and measures to streamline the workforce through redeployment and natural attrition.
Homeplus Co. explained, "The most urgent task is securing emergency operating funds," adding, "The major shareholder MBK Partners and the largest creditor Meritz will participate preemptively as part of sharing the burden, and on that premise we have proposed a method in which state-run institutions, including Korea Development Bank, partially participate in providing funds through loans."
It added, "On the premise of responsible burden-sharing by the shareholder company and the largest creditor, state-run institutions will also partly participate in providing emergency operating funds, which will dispel anxiety and concern about the feasibility of rehabilitation and help win the consent and support of stakeholders, including the labor union, for the rehabilitation plan."
It continued, "We will continue to faithfully consult with all stakeholders, including the court, creditors, and the labor union, to push ahead with structural innovation without setbacks and do our best to make a leap forward again as a sustainable corporations."