Homeplus Co. is said to have repeatedly asked Meritz Financial, its largest creditor, for emergency operating funds, saying it is difficult to keep even currently operating stores open due to a lack of working capital.
According to the retail industry on the 17th, Homeplus Co. recently requested an emergency operating fund (DIP) loan from Meritz, saying it has reached the limits of its liquidity. DIP financing refers to new funds raised by corporations undergoing rehabilitation proceedings to continue operations.
On the 10th, Homeplus Co. temporarily suspended operations at 37 of its 104 stores, citing business normalization and securing liquidity. As a result, 67 stores are currently continuing operations.
However, it is said that operating the remaining stores is not easy either. Homeplus Co. failed to pay part of April wages and is said to be having difficulty paying wages this month as well. With the burden of essential operating costs—such as labor costs, logistics expenses, and payments to partner companies—growing, it says it will be difficult to continue normal operations without additional funds.
Homeplus Co. is also said to find it difficult to raise funds on its own. A substantial portion of key asset is tied up in a collateral trust structure with Meritz, limiting its capacity to provide additional collateral or borrow externally. For this reason, the position is that Meritz is effectively the only party currently able to supply emergency operating funds.
Earlier, Homeplus Co. asked Meritz for a bridge loan needed until the Homeplus Express sale proceeds come in and for DIP financing to push structural reforms until the rehabilitation process is completed. However, whether support will be provided is said to be still undecided.
Homeplus Co. is concerned that if the 67 currently operating stores also close, it may become difficult to continue the rehabilitation process itself. It says that if the rehabilitation is halted, the possibility of switching to liquidation cannot be ruled out.
If it leads to liquidation, Meritz could recover some claims by enforcing collateral rights, but the recovery prospects for subordinated creditors could drop significantly. The employment of about 15,000 employees and damage to about 4,600 partner companies also appears unavoidable. There are concerns that the blow could spread to the commercial districts where the stores are located.