Homeplus Gangseo Branch Headquarters [Yonhap News]

Homeplus requested again on the 17th that its largest creditor, Meritz Financial Group, provide financial support through a loan, stating that it is currently difficult to even maintain the 67 stores in operation due to a depletion of operating funds.

Meritz is reviewing bridge loans but maintains that a firm performance guarantee is necessary, considering concerns about breach of trust.

In a statement released on the same day, Homeplus stated, "Meritz has secured most of its main assets through a trust, so there is no way for us to secure operating funds independently," adding, "At this point, Meritz is the only entity that can provide emergency operating funds through a loan."

Homeplus, which recently sold its supermarket division, Homeplus Express, temporarily suspended operations at 37 of its 104 hypermarkets on the 10th. This was done to normalize operations and secure liquidity, leaving only 67 stores currently operational.

Homeplus was unable to pay April salaries and is reportedly facing difficulties in paying May salaries, which are due on the 21st.

Previously, Homeplus had requested Meritz to provide bridge loans for operating funds needed until the remaining payment from the Express sale is received in about two months, and emergency operating (DIP) loans for structural innovation until the rehabilitation is completed.

Homeplus warned, "Given that it is almost impossible to normalize a retail business once operations cease, if the remaining 67 stores are also forced to close, it is expected to be difficult to continue the rehabilitation proceedings," and added, "There is a high possibility of transitioning directly to liquidation proceedings upon the termination of the rehabilitation process."

It pointed out that in such a case, Meritz, which has secured assets exceeding its claims as collateral, would be able to recover all its claims, but the recovery rate for subordinate creditors would be significantly lowered, leading to increased social damages such as employment instability for employees, harm to tenants, and a contraction of the local economy.

Homeplus emphasized, "We earnestly request that Meritz make a forward-thinking decision as an inclusive financial institution, considering its social responsibility."

However, a Meritz Financial Group official told Yonhap News in a phone call, "Last week, while reviewing the provision of bridge loans, we requested a performance guarantee at a reasonable level from MBK Partners and Homeplus due to breach of trust concerns, but it was refused."

According to industry sources, Meritz Financial Group's stance is that performance guarantee measures, such as a joint guarantee from MBK, are necessary to avoid breach of trust allegations and persuade shareholders in the current uncertain situation of Homeplus's rehabilitation.

The fact that the "Emergency Committee of Homeplus Product Purchase Coupon Holders," composed of victims of subordinate creditors, has protested, stating, "If Meritz Financial Group proceeds with DIP loans without protecting subordinate victims, we will take all legal actions, including criminal charges for breach of trust," is also a burden.

Homeplus proposed to Meritz to establish a pledge on the subordinate beneficial rights of trust real estate instead of Meritz's proposed plan. However, Meritz did not agree to this plan, and it is understood that the review of the bridge loan implementation has not progressed.

Homeplus's position is that accepting Meritz's demand for a joint guarantee is practically difficult.

A Homeplus official said, "Due to the nature of private equity funds, joint guarantees are not easy. Furthermore, as the executive officers of the shareholder companies have already provided personal guarantees and mortgage loans, they do not have the capacity to provide further guarantees. Therefore, we judged that 'establishing a pledge on the subordinate beneficial rights of trust real estate' is the most realistic solution."

He added, "Meritz has already secured collateral of approximately 4 trillion won worth of 68 Homeplus properties for a 1.2 trillion won loan, and is structured to receive preferential repayment for asset sale proceeds that occur after the rehabilitation proceedings," and stated, "In this situation, demanding a personal joint guarantee for a very short-term loan of 2-3 months for operating funds is effectively the same as refusing to support the operating funds of a company undergoing rehabilitation."