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Homeplus approved for corporate rehabilitation after credit downgrade

Published: 04 Mar. 2025, 15:47 Updated: 04 Mar. 2025, 16:08

Shoppers enter Homeplus's Yeongdeungpo District branch in western Seoul on March 4. The supermarket chain entered corporate rehabilitation the same day. [NEWS1]

Homeplus, a discount store chain in Korea, said Tuesday it had entered a court-led rehabilitation process after its credit rating declined amid liquidity worries.

The Seoul Bankruptcy Court approved the rehabilitation proceedings for Homeplus after reviewing its application submitted earlier in the day.

On Friday, Korea Investors Service and Korea Ratings lowered the rating of Homplus' corporate bonds to A3- from A3, citing the lack of the company's efforts to improve its financial health.

“We have decided to file for the rehabilitation program as there existed a possibility of a short-term liquidity crisis. This move is part of our pre-emptive efforts to avoid a liquidity crisis,” a Homeplus official said.

The official argued the company's improved debt-to-equity ratio and increased sales online and in offline stores were not reflected in the credit rating evaluation.

The court's approval for the rehabilitation process shows that Homeplus' fundamentals, including its business value and competitiveness, remain unscathed, he said.

The current management will continue to handle key decisions as the court didn't designate a court-appointed manager for the company, the company said.

Homeplus currently operates 126 stores nationwide, down from 131 a year earlier.

Its outlets are in normal operation across the country despite its filing for the rehabilitation program.

In the fiscal year that ended in February 2024, the company's operating losses narrowed to 199.42 billion won ($137 million) from 260.18 billion won a year ago.

Homplus has reported continued operating losses due to the lack of competitiveness compared with its bigger rivals, such as Emart, the country's largest discount store chain.

In 2015, private equity fund MBK Partners acquired a 100 percent stake in Homeplus for 7.2 trillion won, including 4.3 trillion won in loans, from British retailer Tesco.

Out of the 4.3 trillion won loan, the company said it has paid back about 4 trillion won.

Yonhap