With the deadline for approval of Homeplus Co.'s rehabilitation plan extended by another two months, Homeplus Co. emphasized that support from Meritz Financial is urgently needed to resolve its management crisis, which has reached its limit.
Homeplus Co. said, "This decision is an institutional recognition of the possibility of rehabilitation, but whether it can practically continue depends on securing short-term liquidity," and stated accordingly on the 30th.
Earlier, the Seoul Bankruptcy Court extended the approval deadline to July 3, citing reasons including that the sale of the Homeplus Co. super business unit (Homeplus Express) is about to sign an asset transfer agreement with the preferred bidder.
The ongoing Express sale is seen as a significant step forward in Homeplus Co.'s restructuring process. However, because it will take time for the actual sale proceeds to come in, there are limits to easing the immediate cash crunch, the company said.
Accordingly, Homeplus Co. formally asked its largest creditor, Meritz Financial Group, for emergency operating funds through a bridge loan and DIP financing. But whether this will move forward has not yet been finalized.
Homeplus Co. emphasized, "At this point, the only realistic party that can quickly provide large-scale liquidity is effectively Meritz Financial Group," adding, "A bridge loan and DIP financing, with recovery of the Express sale proceeds expected, are essential financial measures to maintain the continuity of the rehabilitation process." Meritz Financial Group holds most of Homeplus Co.'s liquidatable real estate as trust-type collateral.
Homeplus Co. has seen disruptions in product supply and declining sales accumulate during more than 14 months of rehabilitation proceedings. Without additional liquidity, the company is seen as reaching a stage where it will be difficult to continue operating its hypermarkets.
Homeplus Co. added, "Completing rehabilitation through the Express sale wrap-up and restructuring is also the most realistic path to maximizing creditor recoveries," and "We earnestly ask Meritz Financial Group to quickly make a forward-looking decision that considers both recoverability and rehabilitation value," it said.