"We May Not Even Be Able to Pay This Month's Salaries"... Homeplus Says It Faces Liquidation Without Meritz Loan, With 67 Stores Left on the Brink

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[Financial News] Homeplus has again asked its largest creditor, Meritz Financial Group, for funding through a loan. The company said it needs the support because it is running out of operating cash and can no longer sustain its 67 remaining stores.
In a statement released on the 17th, Homeplus said, "Meritz has secured most of our key assets through trust-backed collateral, so we have no way to raise operating funds on our own." It added, "At this point, Meritz is the only party that can provide emergency funding through a loan."
Homeplus has been asking Meritz to provide a bridge loan to cover operating funds until the remaining payment from the Homeplus Express sale, which is due in about two months, is received. It has also requested a debtor-in-possession (DIP) loan to support restructuring until the rehabilitation process is completed.
After selling Homeplus Express, its supermarket unit, Homeplus temporarily suspended operations at 37 of its 104 large-format stores on the 10th. The move was intended to restore normal operations and secure liquidity. Only 67 stores are currently operating.
Homeplus reportedly failed to pay April salaries and is also struggling to pay May salaries, which are due on the 21st.
Homeplus said, "For retailers, once operations are halted, recovery is almost impossible. If all of the remaining 67 stores are eventually forced to close, it will be difficult to continue the rehabilitation process." It added, "If the rehabilitation process ends, there is a high possibility that it will immediately shift to liquidation proceedings."
It also stressed, "We earnestly ask Meritz to take social responsibility into account and make a forward-looking decision as an inclusive financial institution."
However, Meritz Financial Group is said to have recently considered providing a bridge loan and asked MBK Partners and Homeplus for reasonable performance guarantees, citing concerns over breach-of-trust issues, but the request was reportedly rejected.
Earlier, the Homeplus General Labor Union decided to forgo wages and defer salary payments. In a letter sent under the union's name to suppliers, it said, "Only when goods are supplied smoothly to stores can operations be normalized, and only when stores recover can your valuable payments be fully repaid," and asked them to continue supplying products normally.
ssuccu@fnnews.com Kim Seo-yeon Reporter