Homeplus has launched a restructuring of its remaining business units, including hypermarkets, online operations, and headquarters, following the sale agreement for Homeplus Express. The move comes as the retailer simultaneously pursues store operation efficiency and additional liquidity, with securing working capital for rehabilitation proceedings proving difficult.
According to industry sources on Wednesday, Homeplus plans to temporarily suspend operations at 37 of its 104 hypermarkets — those with lower profit contributions — from this Friday through July 3, and restructure operations around the remaining 67 core stores.
The measure comes as major suppliers have tightened delivery terms and reduced supply volumes following the start of rehabilitation proceedings, creating difficulties in product procurement. Homeplus plans to prioritize available products at core stores to minimize sales declines and customer attrition at key outlets.
Product shortages have continued at some stores, and overall sales have fallen more than 50% from a year earlier. The company determined that concentrating limited supplies at core stores, rather than distributing them across all outlets, would be more favorable for normalizing operations, sources said.
Employees at the 37 stores where operations are suspended will receive leave allowances equivalent to 70% of their average wages. Workers who wish to continue working will be reassigned to other stores remaining in operation. However, shopping mall facilities within the stores will continue normal operations.
Homeplus signed a sale agreement with NS Shopping, the preferred bidder for Homeplus Express, on Tuesday. However, the company judges that the Express sale alone will not secure sufficient funds to implement the rehabilitation plan and normalize remaining businesses.
Accordingly, Homeplus has requested that Meritz Financial Group, its largest creditor, provide a bridge loan for short-term working capital needs before sale proceeds arrive, as well as Debtor In Possession (DIP) financing to maintain operations during the rehabilitation period. To date, Meritz has not confirmed whether it will provide specific support.
Homeplus explained that securing additional funds without Meritz's cooperation would be difficult, as Meritz Financial holds loan receivables of approximately 1.2 trillion won ($880 million) along with real estate collateral worth about 4 trillion won ($2.9 billion) across 68 stores.
"Most of the funds secured through asset sales since the start of rehabilitation proceedings are being used to repay Meritz loans," a Homeplus official said. "Securing working capital has become difficult."
The company is also preparing a revised rehabilitation plan reflecting creditor demands. The revised plan is expected to include store operation efficiency measures, suspension of operations at some stores, and M&A plans for remaining business units.
Homeplus plans to improve the profitability of remaining business units, including hypermarkets, online operations, and headquarters, and subsequently pursue a third-party sale to repay outstanding debts and conclude the rehabilitation proceedings.
