Homeplus moves to sell Express unit in rehabilitation plan

Plan calls for core unit sale, store closures, W300b in court financing

A Homeplus outlet located in Seoul (Newsis)

South Korean hypermarket chain Homeplus, under court-led restructuring, filed its final rehabilitation plan with the Seoul Bankruptcy Court in a last-ditch effort to stabilize operations by selling its smaller-format supermarket unit, Homeplus Express.

According to industry sources Monday, the plan centers on carving out and selling Homeplus Express, which operates neighborhood-scale stores and is widely regarded as the retailer’s most valuable business unit. Market estimates put the sale price at around 700 billion won ($488 million).

The proposal comes nearly nine months after the retailer sought court protection in March, following a failed attempt to sell the business that drew no binding bids despite multiple deadline extensions. Two firms -- Harex InfoTech, a local AI-based retail platform, and Snomad, a real-estate developer -- submitted letters of intent but ultimately did not participate in the main bidding process.

Alongside the Express divestment, the rehabilitation plan calls for selling unprofitable stores, closing as many as 41 underperforming outlets over the next six years, and later divesting the remaining Homeplus business once restructuring is completed.

Homeplus also asked the court to approve 300 billion won in debtor-in-possession financing to fund operations during rehabilitation. DIP financing allows companies under court protection to raise new capital by granting lenders superpriority status over existing creditors.

Industry insiders say the company is seeking the financing as asset sales are likely to be prolonged.

The court is expected to convene a meeting of creditors and other stakeholders to seek approval of the plan, a process that could extend the restructuring timeline into next year. Implementation requires consent from more than 75 percent of secured creditors and at least two-thirds of unsecured creditors.

Meanwhile, Homeplus’s financial strain is deepening, with the company reportedly falling behind on utility bills and supplier payments and recently paying employee wages in installments to conserve cash.

While some caution that divesting crown-jewel assets could erode value, others say the plan ultimately hinges on the stance of Meritz Financial Group, Homeplus’ largest creditor.

Meritz provided roughly 1.22 trillion won in loans to Homeplus in May 2024, securing the debt with trust collateral tied to 62 stores nationwide. Homeplus’ liquidation value is estimated at about 3.7 trillion won, exceeding its 2.5 trillion won going-concern value.

“Meritz’s exposure is secured by Homeplus’s real estate, meaning a shift in repayment priority would have little practical impact,” said an industry official. “The challenge lies in securing the consent of other creditors, who lack such collateral.”