About eight months after Homeplus Co. applied for corporate rehabilitation in March last year, the company's two labor unions have laid bare sharp differences over the "structure-innovation rehabilitation plan" Homeplus Co. submitted to the court last month. The general union cast a vote in favor of Homeplus Co.'s rehabilitation plan, but the mart union is opposing it, saying it has "no sustainability."
On the 29th of last month, Homeplus Co. submitted a structure-innovation rehabilitation plan to the Seoul Bankruptcy Court and is proceeding with its own rehabilitation process. The plan includes: ▲ promoting a DIP (debtor-in-possession) loan of 300 billion won for operating funds of rehabilitating corporations ▲ selling 10 self-owned stores and the Express division over the next three years ▲ closing 41 underperforming stores over six years ▲ improving the financial structure through measures such as workforce efficiency.
Chief Executive Cho Ju-yeon of Homeplus Co. pleaded at an emergency roundtable titled "Will we let Homeplus close like this?" held in National Assembly Members' Office Building Small Conference Room No. 1 on the 21st, saying, "If emergency operating funds are not secured within this month, it will be difficult to pay employee wages and merchandise payments, and the rehabilitation process itself could stop," and "Give us a last chance so Homeplus Co. can get back on its feet."
Homeplus Co. is now facing bankruptcy speculation due to worsening liquidity as sales plunged after court receivership. With its finances deteriorating, the company halted operations at 10 stores last month, including Gayang, Jangnim, Ilsan, Woncheon and Ulsan Buk-gu, and this month it also announced additional suspensions at seven stores. It also failed to pay wages on time, splitting last month's wages into two payments, and this month's wages are delayed.
To break through the immediate deterioration in management, Homeplus Co. believes a 300 billion won DIP injection is needed this month. To that end, Homeplus Co. has proposed a structure in which MBK Partners, the largest shareholder, shoulders 100 billion won of the 300 billion won, Meritz Financial Group, the largest creditor, covers 100 billion won, and the state-run Korea Development Bank provides 100 billion won.
Cho added, "We have already been in arrears on various taxes and public charges for months, and although today is payday, we cannot even pay employees' wages, putting their families' livelihoods at risk," and "Homeplus Co.'s rehabilitation cannot be achieved by employees' efforts alone. Cooperation and support from all stakeholders, including the court, the National Assembly, the creditors and partners, are needed."
In response, Ahn Su-yong, chairperson of the Homeplus Co. chapter of the mart union, countered, "We firmly oppose the liquidation-type restructuring proposed by MBK Partners. They are saying they will revive a company that failed because of debt with more debt; how could we agree to that?"
Ahn, the chairperson, said, "We are open to discussing reasonable restructuring measures that can save Homeplus Co. and enable it to be acquired through M&A as a sustainable company," but argued, "MBK is currently shifting responsibility for Homeplus Co.'s management failure onto workers."
Ahn also emphasized, "Homeplus Co. says that if a store where an employee worked is closed, it will arrange for the employee to work at a nearby store, but cases in which stores in the same area are closing one after another are now becoming reality," and "In the end, this creates a situation where employees have to work at stores in other regions far away, which is practically telling them to quit."
Unlike the mart union, which declared opposition to the rehabilitation plan, the Homeplus Co. general union and the One-Mind Council, a representative employee body, said they agree with Homeplus Co.'s rehabilitation plan.
Both the general union and the mart union are affiliated with the Korean Confederation of Trade Unions (KCTU), but the mart union is led mainly by original Homeplus Co. employees who worked there since the Samsung C&T and Tesco joint venture era, while the general union was formed mainly by employees of E-Land Group's Homever (formerly Carrefour), which Homeplus Co. acquired in the past. According to Homeplus Co., employees belonging to the general union and the One-Mind Council make up 87% of the total, and mart union members account for about 13%.
Lee Jong-seong, chairperson of the Homeplus Co. general union who attended the roundtable, said, "It has already been 10 months since the Homeplus Co. rehabilitation process began. During that time, the situation facing Homeplus Co. has only worsened," and "Even today's pay has not been made, and the Lunar New Year bonus due in half a month is also uncertain."
He continued, "Over the past 10 months, we have hoped for capital support from major shareholder MBK Partners, but we realized there is no legal means to compel it. How long must we wait for the government to intervene? What is most urgent now is to overcome the liquidity crisis and normalize the company as quickly as possible."
Cho said, "If 300 billion won raised through the DIP and 300 billion won secured through the sale of Homeplus Express flow in, we believe we can operate Homeplus Co. stably for the next year," adding, "If funds come in, this is a company that can certainly be saved."