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Homeplus begins hunt for new owner under court-led restructuring

Published: 13 Jun. 2025, 11:10 Updated: 13 Jun. 2025, 20:31

Shoppers enter a Homeplus branch in Michuhol District, Incheon, on May 27. [NEWS1]

Korean retail chain Homeplus has begun the search for a new owner to inject fresh capital as it undergoes court-led restructuring. The strategic shift comes after a court-commissioned audit found the troubled company’s liquidation value exceeds its going-concern value by roughly 1.2 trillion won ($879 million).

Homeplus disclosed the strategy in a briefing with its creditors on Thursday at its headquarters in Gangseo District, western Seoul, presenting the key findings from an audit report by Samil PwC, the court-appointed examiner.

The company is expected to submit a formal request to the Seoul Bankruptcy Court on Friday to begin a prepackaged merger and acquisition (M&A) process — a pre-approval step toward selling the company before the court finalizes a rehabilitation plan.

According to the audit, Homeplus’s expected earnings over the next 10 years total 2.51 trillion won. In contrast, the value it could recover from selling off assets and shuttering operations reaches 3.68 trillion won — about 1.18 trillion won higher.

A company representative attributed the gap to Homeplus’s real estate-heavy asset structure and disruptions to normal business caused by the court process.

“Our real estate holdings [including store properties] are worth 6.85 trillion won. That’s about 4 trillion won more than our liabilities [of 2.87 trillion won]. The operational disruptions [from the restructuring process] also affected profitability,” the spokesperson said.

Samil PwC advised against liquidation, recommending instead that Homeplus seek a new investor through a prepackaged M&A to raise fresh capital.

“To meet its business targets as a going concern, Homeplus needs an injection of outside capital through investment or pre-approval M&A,” the report stated.

“It simply means they need to find a new owner willing to inject capital,” an investment banker who asked for anonymity explained.

“If such a plan can repay creditors through the acquisition price, the court is more likely to approve rehabilitation.”

The precedent for this approach is the 2021 turnaround of KG Mobility — formerly SsangYong Motor — where the court allowed a prepackaged M&A even though the liquidation value of 980 billion won exceeded the going-concern value of 620 billion won. KG Group later acquired the automaker in August 2022, enabling a successful restructuring.

A Homeplus branch in Incheon's Michuhol District is shuttered on May 27. [NEWS1]

“The court doesn’t automatically shut down rehabilitation just because the liquidation value is higher,” attorney Bang Hyo-seok of Wooil Law Firm said. “Public interest, such as job retention, and creditor-debtor consensus on the plan can justify pre-M&A approval, just as in the case of SsangYong Motor.”

The plan hinges on creditor support. If the creditor group rejects the proposal, the court is unlikely to greenlight the prepackaged M&A. Meritz Financial Group, which lent 1.2 trillion won to Homeplus against store real estate, is seen by industry insiders as a pivotal stakeholder.

If the court approves the request, Homeplus and its new owner will draft a new rehabilitation plan together.

Members of a coalition formed to defend Homeplus workers hold a press conference in front of the Homeplus's Jamsil branch in Songpa District, southern Seoul, on June 2, voicing opposition to the planned closures of the Jamsil and Jayoung locations. [NEWS1]

The M&A would also mark the exit of MBK Partners, Homeplus’s largest shareholder. Unlike conventional deals, prepackaged M&As typically involve issuing new shares to the buyer, diluting or eliminating existing shareholders. MBK’s 2.5 trillion won stake would be wiped out.

“We will relinquish all rights, including management control and actively support the buyer’s acquisition without demanding any compensation,” an MBK spokesperson said.

Economic ripple effects loom large. If Homeplus shuts its 434 stores — including its Express locations — 19,000 direct jobs could vanish, according to the retail chain. Factoring in contractors and vendors, up to 100,000 people might be affected.

“Social costs like unemployment must be weighed when calculating liquidation value,” said Kim Hong-kyun, a professor of economics at Sogang University. “Closing a major employer for a marginally higher liquidation value can have severe societal consequences.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY YEOM JI-HYEON [[email protected]]