Homeplus Co. said regarding the 100 billion won bridge loan from Meritz Financial Group (Meritz) that it is an "ultra-short-term working-capital loan that will be repaid immediately when the proceeds from the sale of Homeplus Express come in."
Homeplus Co. issued a statement on the 18th, saying, "Meritz Financial Group proposed, in connection with an ultra-short-term loan to secure emergency working capital, a condition that the loan be repaid early immediately upon the inflow of the proceeds from the sale of Homeplus Express."
According to Homeplus Co., Meritz recently conveyed that it could review the possibility of supporting an ultra-short-term working-capital loan of about 100 billion won for two to three months. As conditions, it reportedly proposed immediate early repayment upon the inflow of Express sale proceeds, annual 6% interest, and joint and several guarantees by major shareholder MBK Partners and members of management.
Homeplus Co.'s position is that it proposed pledging a security interest in subordinated revenue rights on real estate as collateral instead of joint and several guarantees. A Homeplus Co. official explained, "The business transfer agreement for Express has already been signed, the transaction is expected to be completed by the end of June and the proceeds to be received, and individuals have already provided joint and several guarantees to support other working-capital financing."
It added, "If the loan is executed, the actual period of use will be only about a month," and "Even so, the reason for accepting the Meritz loan is that, without resolving pending issues such as unpaid wages and overdue payments for goods, it will be seriously difficult to continue Homeplus Co.'s rehabilitation."
Meritz currently holds 68 Homeplus Co. stores as collateral, and the proceeds from major real estate sales that have been completed or are underway after the rehabilitation process are also being used first to repay Meritz's claims.
Homeplus Co. temporarily suspended operations at 37 of its 104 total stores on the 10th. The move aims to normalize operations and secure liquidity. The number of stores currently operating is 67, and the company, citing the possibility of suspending operations at these locations, has again asked Meritz for funding support.
Meritz, meanwhile, maintains that, given the nature of a bridge loan, implementation safeguards such as a joint and several guarantee by major shareholder MBK Partners are necessary. A Meritz official explained, "Because the sale of Homeplus Express is within the controllable scope of major shareholder MBK, a joint and several guarantee is an essential measure to prevent breach of trust and to persuade shareholders."
Since due diligence on Homeplus Express is underway, there is a view that a responsible guarantee by the major shareholder is needed because uncertainties remain, including whether the final sale proceeds will be secured. An industry official added, "Although MBK bears responsibility for the deterioration of Homeplus Co.'s management, it is shifting responsibility and burden onto creditors," and "This goes beyond the Homeplus Co. situation and could undermine market order."