South Korean supermarket chain Homeplus has pledged to fully repay its vendors, prioritizing small businesses, while apologizing for heightened concerns over its financial stability following a court's approval of its entry into a corporate rehabilitation program earlier this month.
At a press conference on Friday, Homeplus CEO Joh Ju-yeon announced the company had repaid 340 billion Korean won ($234 million) in commercial receivables and assured that most debts to small business owners would soon be settled, though payments to large corporations and franchisees might take longer.
"We sincerely apologize for any inconvenience caused to our partners, store owners and investors due to the rehabilitation proceedings," Joh said. "We are doing our best to minimize damage and normalize our operations as soon as possible."
"We are making payments to our suppliers and leasehold store owners in sequential order," she remarked. "We ask larger suppliers to be patient, as we will fully honor all bond redemptions according to the installment schedule."
Homeplus filed for court-led rehabilitation on March 4, sending shockwaves through the local retail and financial sectors, a measure the company described as a precautionary step to ease its short-term debt burden after a credit downgrade. Homeplus’ corporate rehabilitation plan is due for submission by June 3.
Despite the turmoil, Joh remained confident in the company’s ability to stay afloat, underscoring that the rehabilitation process is accelerating Homeplus’ recovery.
She noted that Homeplus had around 160 billion won in cash reserves as of Thursday and continues to generate a steady cash flow, ensuring that remaining commercial bond payments can be met.
Joh also reassured stakeholders that despite Homeplus’ financial distress, its core retail operations remain stable.
As of Thursday, compared to normal operations, the company maintained a 95 percent transaction rate across all its platforms, with malls (99.9 percent), logistics (100 percent) and subcontractor operations (100 percent) continuing without disruption.
The company further highlighted unexpected gains in sales since entering court-led rehabilitation, noting that revenue in the first week following the filing rose 13.4 percent on-year, while customer traffic increased by 5 percent.
Regarding the financial scandal surrounding MBK Partners, the private equity firm behind Homeplus, Vice Chairman Kim Kwang-il denied several allegations.
He dismissed claims that MBK played a role in Homeplus’ financial decline, stating, “The sale-and-leaseback strategy is a common business practice, and proceeds from store sales were reinvested into Homeplus operations.” He also noted that Homeplus’ store count had declined less than that of E-Mart and Lotte Mart.
He also confirmed that the planned sale of Homeplus’ supermarket division was put on hold due to the rehabilitation proceedings. “We are committed to shielding Homeplus from bankruptcy,” Kim reiterated.
minmin@heraldcorp.com
