Company also moves to permanently close 37 temporarily shuttered stores; voluntary redundancy feared for 3,500 workers
Homeplus is considering selling 19 of its closed, company-owned stores to liquidate additional assets and repay mounting public-interest and rehabilitation debts amid a funding crunch. The hypermarket chain has also decided to permanently close 37 stores that had been placed under temporary suspension.
Homeplus is reviewing a plan to sell the 19 company-owned stores it closed this year. Most of the stores slated for sale are among the 37 locations placed under temporary suspension between May 10 and July 3. Homeplus recently notified its union of the decision to permanently close all 37 stores.
The moves are outlined in a revised rehabilitation plan Homeplus drew up ahead of the July 3 deadline for creditors to approve a restructuring proposal. The company shared the revised plan with its creditor council at the end of last month. The plan includes multiple restructuring scenarios contingent on the court granting a further extension.
Homeplus has already put its headquarters and online and hypermarket divisions on the market for merger and acquisition, in addition to the supermarket unit — Homeplus Express — sold to NS Home Shopping, an affiliate of Harim Group. Samil PricewaterhouseCoopers, the appointed sale manager, has sent official teasers to potential buyers including major domestic retail conglomerates. Homeplus is understood to be prioritizing a plan to complete the sale of its remaining business divisions by September and use the combined proceeds — including revenue from store property sales — to repay creditors.
However, if the sale falls through or is delayed, Homeplus is also considering maximizing profitability at its 67 currently operating stores by converting interiors to focus on groceries and leasing out the freed-up floor space to outside retailers. The revised rehabilitation plan also includes a proposal to repay debts in installments over 10-year periods.
As Homeplus's financial difficulties deepen, fears of widespread store closures have become reality. On Thursday, the company sent official notices to the Homeplus branch of the Mart Industry Labor Union and a general union, stating it had "decided to proceed with the closure of 37 stores currently suspended due to low contribution" and that it intended to apply an "asset liquidation store support program" to employees at the affected locations. The notice also announced a voluntary redundancy program targeting staff at the rank of team leader or above, with employees who have less than six months remaining until mandatory retirement excluded.
This marks the first time Homeplus has officially acknowledged plans to close the 37 suspended stores and pursue voluntary redundancies. Approximately 3,500 workers are employed across the 37 locations.
Homeplus added a caveat, however, stating that the asset liquidation support program and voluntary redundancy measures "can only be applied if creditors agree to an emergency operating loan and an extension of the rehabilitation proceedings due to the depletion of operating funds." Without additional loans from creditors and approval from the rehabilitation court, workers could effectively face compulsory redundancy with little or no compensation.
Earlier, Meritz Financial Group, the largest creditor, made clear it could consider a bridge loan of 100 billion won (about $65.4 million) on the condition that Kim Byung-ju, chairman of Homeplus's majority shareholder MBK Partners, personally guarantee the arrangement. Homeplus countered with a proposal for a personal guarantee and additional collateral from Kim Gwang-il — the Homeplus administrator, MBK Partners vice chairman and Homeplus chief executive — but negotiations collapsed.
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