Homeplus says Meritz would pocket 500 billion won in extra profit if retailer goes bankrupt

Homeplus has claimed that Meritz Financial, its largest creditor, would gain about 500 billion won ($326 million) in profit if the retailer is declared bankrupt.

According to industry sources, Homeplus said in a statement Tuesday that Meritz has already collected 256.1 billion won in principal and interest since extending a 1.3 trillion won loan to Homeplus through a refinancing deal in May 2024. The breakdown consists of 134.8 billion won in principal repayment and 121.3 billion won in interest and fees.

Homeplus said that if it fails to complete its court-led rehabilitation and is instead liquidated, Meritz would dispose of 64 stores it holds as collateral trust through a private auction, recovering a total of 1.56 trillion won. Homeplus said that figure represents the collateral amount Meritz has secured against the relevant real estate properties, and includes the loan principal plus overdue interest calculated at an annual rate of 20 percent until the principal is fully repaid.

Adding the 256.1 billion won Meritz has already collected to the 1.56 trillion won it would recover in a bankruptcy scenario, Homeplus said the total amount Meritz would recoup comes to 1.8161 trillion won. "Given that the loan principal was 1.3 trillion won, Meritz would earn 500 billion won in interest income — equivalent to 40 percent of the original principal — in just two and a half years," Homeplus said.

"Under the current structure, liquidating Homeplus could result in greater financial gains for Meritz than a successful rehabilitation would," Homeplus said. "Meanwhile, employees, business partners, suppliers, small merchants and general creditors would face the risk of losses."

"Rehabilitation is a path that allows all stakeholders to survive together, but liquidation could result in more than 500 billion won in additional profit going solely to Meritz, the primary creditor," it added.