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Court adviser recommends M&A for Homeplus ahead of rehabilitation plan approval

Published: 12 Jun. 2025, 20:56

A Homeplus store in Incheon on May 27 [NEWS1]

A court-appointed accounting firm has recommended pursuing a merger and acquisition (M&A) deal for Homeplus before the court decides on the approval of its rehabilitation plan, the Korean retailer said Thursday.

Homeplus filed for corporate rehabilitation with the Seoul Bankruptcy Court in March after two domestic credit rating agencies downgraded its corporate bonds from A3 to A3-, citing the company's lack of progress in improving its financial health.

The company is required to submit its rehabilitation plan by July 10.

In a report submitted to the court and presented to Homeplus' creditors, Samil PwC recommended an M&A auction be held prior to the court approving the rehabilitation plan, noting that the company's liquidation value exceeds its going concern value.

According to the report, Homeplus holds assets worth 6.8 trillion won ($5.06 billion), while liabilities total 2.9 trillion won. Samil estimated the company's liquidation value at 3.7 trillion won, higher than its going concern value of 2.5 trillion won, which was calculated based on the present value of projected free cash flows over the next decade.

In response to the examiner's findings, court-appointed managers said they plan to request court approval to proceed with an M&A before finalizing the rehabilitation plan.

The court-designated managers are Kim Kwang-il, vice chairman of MBK Partners and co-CEO of Homeplus, and Jo Ju-yeon, president and co-CEO of the company.

Should the court grant approval, submission of the rehabilitation plan will be postponed until the M&A process is completed, Homeplus said in a press release.

"A successful M&A held before court approval of a rehabilitation plan would bring in new capital, allowing Homeplus to repay creditors early and stabilize operations," the release said.

Samil cited three main reasons behind Homeplus' financial difficulties: a business model burdened by rising fixed costs, the impact of the Covid-19 pandemic and the rapid shift in consumer preference toward online shopping.

MBK Partners acquired a 100 percent stake in Homeplus in 2015 from British retailer Tesco for 7.2 trillion won.

YONHAP