Homeplus Co. will move to resume rehabilitation proceedings based on an agreement between its major shareholder MBK Partners and its largest creditor Meritz Financial Group to raise 200 billion won in emergency operating funds (DIP). However, with variables such as accumulated cash shortages, restoring trust with partners, and the court's final decision still remaining, some expect it will take considerable time to fully normalize operations.
According to the retail industry on the 19th, Homeplus Co. plans to file an immediate appeal with the Seoul Bankruptcy Court on the 20th, moving to restart the rehabilitation process.
On the 3rd, the Seoul Bankruptcy Court decided to terminate Homeplus Co.'s rehabilitation proceedings. However, it previously said it could reconsider the termination if a plan to raise 200 billion won in DIP funds is prepared by the immediate appeal deadline of the 20th.
MBK and Meritz, which had been at odds over the method of raising DIP funds, reached a deal on the 16th, four days before the immediate appeal deadline. MBK agreed to provide a joint guarantee for the entire 200 billion won in DIP funds needed by Homeplus Co.. Meritz Fire & Marine Insurance, Meritz Securities, and Meritz Capital also each held board meetings and approved loan authorizations totaling 200 billion won.
Even so, the industry believes several hurdles remain to normalize Homeplus Co.'s operations. In particular, there are views that the 200 billion won to be injected may be insufficient to normalize product supply and operations at 67 core stores.
Unpaid delivery fees to partners by Homeplus Co. amounted to about 410 billion won as of the end of April. As of the end of May this year, public-interest claims also increased to 1.0999 trillion won. Even if the entire 200 billion won in DIP funds is injected, it will be difficult to handle overdue delivery payments and store operating expenses all at once.
To resume suspended product supply, trust with partners must also be restored. It is expected to take a fair amount of time to restock stores where inventory has been depleted and to normalize the logistics network.
The court's decision also remains. The Seoul Bankruptcy Court plans to decide whether to cancel its decision to terminate the rehabilitation proceedings after reviewing the funding plan submitted by Homeplus Co. and the company's prospects for rehabilitation. The DIP loan also requires court approval and execution procedures by financial firms.
A Homeplus Co. official said, "If the court decides to resume the rehabilitation process, after completing restructuring we plan to pursue mergers and acquisitions (M&A) for the remaining business units, including headquarters, hypermarkets, and online," adding, "We will secure consent from key creditors for the rehabilitation plan, consult with partners to resume product supply, and finalize store-by-store reopening schedules."