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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] South Korean retailer Homeplus has requested emergency operating funds from its largest creditor, Meritz Financial Group, warning that it may be unable to sustain store operations or meet payroll obligations amid a worsening liquidity crunch.
Homeplus said its ability to secure independent financing has been effectively blocked, as most of its key assets have been tied up in trust arrangements with Meritz. Without immediate financial support, the company indicated that continued operations could be at risk.
In an effort to raise cash, Homeplus recently sold its supermarket division, Homeplus Express, to NS Shopping. It has also temporarily suspended operations at 37 of its 104 hypermarket locations, leaving 67 stores currently in operation.
The company warned that further store closures could jeopardize its ability to proceed with rehabilitation efforts, noting that business continuity is critical in the retail sector. Homeplus has already failed to pay April wages, and there are growing concerns that May payroll, due on May 21, may also be delayed. Emergency debtor-in-possession (DIP) financing of KRW 100 billion provided by its largest shareholder, MBK Partners, has reportedly been exhausted, largely used to cover overdue employee wages. Payments to suppliers, estimated at around KRW 200 billion, also remain outstanding.
Although the sale of Homeplus Express is expected to bring in approximately KRW 120 billion in cash, the proceeds are not expected to be received for another two months, intensifying near-term liquidity pressure. Homeplus is seeking bridge financing or additional DIP loans from Meritz to sustain operations until the funds are received and to support restructuring efforts during court-led rehabilitation proceedings.
Meritz Financial, however, has taken a cautious stance, emphasizing the need for safeguards against potential losses. The firm has reportedly requested a performance guarantee from MBK Partners as a condition for extending bridge financing, but the proposal has been declined.
If Homeplus fails to proceed with rehabilitation and enters liquidation, Meritz—holding secured claims—would likely recover its loans, while recovery rates for junior creditors could be significantly lower. The company warned that liquidation could have widespread repercussions, affecting approximately 15,000 employees, 4,600 suppliers, and 2,900 tenants, and urged Meritz to make a more proactive decision to support its recovery.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
