Homeplus is moving toward selling three stores, including its Daejeon Yuseong branch, a process that could raise about 230 billion won ($153 million). Lawmakers have proposed using part of the proceeds as debtor-in-possession financing, but Meritz Financial Group, the company's largest creditor, has said it intends to recover the full amount.
According to industry sources Friday, Homeplus has been pursuing the sale of three closed stores. Sale contracts have been signed for two of the stores, fetching a combined 170 billion won. The Daejeon Yuseong branch, priced at 60 billion won, has yet to close a deal.
Lawmakers have proposed channeling the 170 billion won into DIP financing for Homeplus. However, Meritz Financial Group — the company's largest creditor and first-priority secured creditor — has reportedly declared it will recover the full amount.
Democratic Party of Korea lawmaker Kim Nam-geun told reporters Thursday after a meeting at the National Assembly, hosted by the Democratic Party's Euljiro Committee with executives from MBK Partners and Meritz Financial Group, that the two sides had discussed using part of the 170 billion won from the two store sales as DIP financing. "Meritz said it cannot accept that and will take all of it," he said.
Kim added that Meritz had stated its position that any future store sale proceeds would likewise be recovered in full. "Further discussion seems necessary," he said.
How the sale proceeds are used will determine Homeplus's fate. The Seoul Bankruptcy Court ruled July 3 to terminate Homeplus's corporate rehabilitation proceedings, but said the company could resume the process if it secured 200 billion won in operating funds and filed an immediate appeal within 14 days.
If Homeplus can draw on the store sale proceeds, it may be able to restart rehabilitation. But if Meritz does not back down from its full-recovery stance, the company will in effect be on a path to dissolution.
MBK Partners, Homeplus's majority shareholder, and Meritz Financial Group have long been at odds over DIP financing for the retailer. Meritz has maintained that it would lend only 100 billion won — half of the 200 billion won needed — and only if MBK Partners Chairman Kim Byung-ju provided a personal guarantee. MBK Partners, for its part, has insisted that Kim would only offer a personal guarantee if Meritz committed to lending the full 200 billion won.
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