Key facts
- Meritz Financial Group will extend 200 billion won (US$134 million) in fresh funding to Homeplus Co.
- The funding is guaranteed by MBK Partners, the sole owner of Homeplus.
- A court recently terminated Homeplus' rehabilitation proceedings.
- Homeplus had temporarily suspended operations at several outlets due to a lack of operating capital.
- Homeplus plans to appeal the court's decision to terminate its rehabilitation proceedings.
Meritz Financial Group has agreed to provide 200 billion won (US$134 million) in fresh funding to the financially troubled discount store chain Homeplus Co., with the loan fully guaranteed by its owner, private equity fund MBK Partners. This decision comes after the Seoul Bankruptcy Court terminated Homeplus' rehabilitation proceedings earlier this month, pushing the company closer to potential closure.
Homeplus had temporarily suspended operations at several of its outlets due to a lack of operating capital. The court's rejection of the company's revised rehabilitation plan was based on its failure to secure the necessary funds.
Homeplus welcomed the additional funding from Meritz Financial Group and announced its intention to appeal the court's decision to terminate its rehabilitation proceedings. The retailer stated that labor unions, MBK Partners, and Meritz have agreed to cooperate to continue the rehabilitation process. If the appeal is successful and rehabilitation proceedings are extended, Homeplus indicated that temporarily closed large discount stores would resume operations after consultations with partner companies.
The discount store chain has been struggling financially due to a slump in the industry and entered court-led rehabilitation proceedings in March of last year. MBK Partners acquired Homeplus in 2015 from British retailer Tesco Plc for 7.2 trillion won. At its peak, Homeplus operated over 140 stores nationwide, but its financial condition deteriorated over time. Efforts to secure additional funding were reportedly hindered by a dispute over responsibility between MBK Partners and Homeplus' largest creditor.