Latest news with #JohJu-yeon
Korea Herald
14-03-2025
- Business
- Korea Herald
Homeplus downplays bankruptcy fears, commits to full debt repayment
South Korean supermarket chain Homeplus has pledged to fully repay its vendors, prioritizing small businesses, while apologizing for heightened concerns over its financial stability following a court's approval of its entry into a corporate rehabilitation program earlier this month. At a press conference on Friday, Homeplus CEO Joh Ju-yeon announced the company had repaid 340 billion Korean won ($234 million) in commercial receivables and assured that most debts to small business owners would soon be settled, though payments to large corporations and franchisees might take longer. "We sincerely apologize for any inconvenience caused to our partners, store owners and investors due to the rehabilitation proceedings," Joh said. "We are doing our best to minimize damage and normalize our operations as soon as possible." "We are making payments to our suppliers and leasehold store owners in sequential order," she remarked. "We ask larger suppliers to be patient, as we will fully honor all bond redemptions according to the installment schedule." Homeplus filed for court-led rehabilitation on March 4, sending shockwaves through the local retail and financial sectors, a measure the company described as a precautionary step to ease its short-term debt burden after a credit downgrade. Homeplus' corporate rehabilitation plan is due for submission by June 3. Despite the turmoil, Joh remained confident in the company's ability to stay afloat, underscoring that the rehabilitation process is accelerating Homeplus' recovery. She noted that Homeplus had around 160 billion won in cash reserves as of Thursday and continues to generate a steady cash flow, ensuring that remaining commercial bond payments can be met. Joh also reassured stakeholders that despite Homeplus' financial distress, its core retail operations remain stable. As of Thursday, compared to normal operations, the company maintained a 95 percent transaction rate across all its platforms, with malls (99.9 percent), logistics (100 percent) and subcontractor operations (100 percent) continuing without disruption. The company further highlighted unexpected gains in sales since entering court-led rehabilitation, noting that revenue in the first week following the filing rose 13.4 percent on-year, while customer traffic increased by 5 percent. Regarding the financial scandal surrounding MBK Partners, the private equity firm behind Homeplus, Vice Chairman Kim Kwang-il denied several allegations. He dismissed claims that MBK played a role in Homeplus' financial decline, stating, 'The sale-and-leaseback strategy is a common business practice, and proceeds from store sales were reinvested into Homeplus operations.' He also noted that Homeplus' store count had declined less than that of E-Mart and Lotte Mart. He also confirmed that the planned sale of Homeplus' supermarket division was put on hold due to the rehabilitation proceedings. 'We are committed to shielding Homeplus from bankruptcy,' Kim reiterated.
Korea Herald
04-03-2025
- Business
- Korea Herald
Homeplus granted corporate rehabilitation amid credit woes
The Seoul Bankruptcy Court announced Tuesday that it had approved the corporate rehabilitation request filed by South Korean supermarket chain Homeplus, initiating prompt proceedings just 11 hours after the filing. On Tuesday morning, Homeplus announced that it had filed for corporate rehabilitation as a preemptive measure to address potential funding issues following its recent credit rating downgrade. The court's decision to approve the proceedings was based on the assessment that a funding shortage could arise around May if the financial structure did not improve, despite the chain not being in default, due to the downgrade of its commercial paper credit rating. Homeplus will be able to proceed with the rehabilitation process while its normal operations continue without disruption. The deadline for submitting the rehabilitation plan is June 3. The court also ruled to uphold the company's current co-CEO system during the preemptive restructuring process, led by CEO Joh Ju-yeon and MBK Partners Vice Chairman Kim Kwang-il. In 2015, private equity fund MBK Partners acquired Homeplus for 7.2 trillion won ($4.9 billion). Homeplus's rehabilitation filing came as its improved sales and debt ratio were not adequately reflected in its credit evaluation, the company stated, leading Korea Investors Service to downgrade its credit rating from A3 to A3- on Friday. The credit agency attributed the rating cut to weakened profitability, high financial burdens and uncertainty surrounding mid- to long-term business competitiveness. 'We applied for rehabilitation proceedings to ease short-term debt repayment, as the lowered credit rating could potentially cause funding issues,' an official from Homeplus said, emphasizing that the move is only a preventive measure. As of January, Homeplus reported a debt ratio of 462 percent and annual sales of 7.04 trillion won, reflecting a 1,506 percent improvement in its debt ratio and a 2.8 percent increase in sales compared to the previous year. Although annual revenue had been on a four-year decline, dropping from 7.65 trillion won in 2018 to 6.48 trillion won in 2021, sales figures have trended upward in the past three years, reaching 6.6 trillion won in 2022 and 6.93 trillion won in 2023. In 2023, the company posted operating losses of 199.42 billion won, narrowing the 260.18 billion won loss from the year before. Excluding lease liabilities that account for all rent during the remaining contract period, Homeplus's actual financial debt, including operating funds borrowing, stands at about 2 trillion won. With over 4.7 trillion won in real estate assets, the company expects a smooth restructuring process with financial creditors under the rehabilitation plan. The company stated that deferring financial debt through rehabilitation will improve future cash flow by reducing financial burdens. Since most of its sales are cash-based, the company generates a surplus of about 100 billion won within just one or two months. While bond redemptions will be suspended during the rehabilitation proceedings, general business dealings with partner companies will be settled in full, and employee salaries will continue as usual, the company explained. 'Supermarket chains have faced challenges over the past decade, including regulatory pressures, the post-COVID shift to online shopping, and the rise of e-commerce. Despite this, we have achieved sales growth for three consecutive years and remain committed to improving business performance,' the company official said.
