Homeplus, which resumed operations after a series of twists and turns last week, has in effect submitted its final reorganization plan to the court. The plan involves selling 19 company-owned stores (excluding leased locations) out of the 37 stores that closed in May by February 2028, and creating an annual surplus structure in the range of 200 billion won within four years to repay various bonds.
According to relevant industry sources on the 21st, Homeplus announced in its second revised reorganization plan submitted to the court on the 13th that it will raise a total of 1.4192 trillion won by selling non-core stores by February 2028.
Specifically, this includes the Yuseong branch (123 billion won) and Dong Gwangju branch (50.5 billion won), for which conditional sales contracts were signed in April this year, as well as the remaining payment for the Yatab branch (80 billion won) and Seomyeon branch (25.6 billion won). The company plans to dispose of the remaining stores, including Junggye branch, by February 2028 to raise 1.14 trillion won.
These funds will be used first to repay trust collateral bonds set by Meritz Financial Group, the largest creditor. This is because releasing these security rights will allow other company-owned store security rights to be released, enabling additional funding from financial institutional investors.
Homeplus plans to raise approximately 600 billion won in February 2030, after repaying all emergency operating funds (DIP) loans, using 38 company-owned stores as collateral to pay off public interest bonds such as unpaid wages and taxes. In 2037, the company decided to increase the scale of collateral loans to about 900 billion won to secure repayment funds.
Regarding this, Homeplus explained that "the real estate appraisal value of the 38th company-owned stores is approximately 2.8 trillion won, which is at a typical level for real estate collateral loans."
For this fund-raising scenario to materialize, the sale of 19 stores must proceed smoothly within one and a half years, and the remaining 67 stores must operate normally to create a solid profit structure. If store securitization is delayed or if the company faces difficulties in turning profitable, it means the reorganization plan could be abandoned midway.
Homeplus has warned of high-intensity restructuring. The reorganization plan includes structural innovation measures such as reducing store operations staff and headquarters personnel, organizational restructuring and workforce reallocation, and cost reduction, in addition to disposing of assets and closing underperforming stores. This is expected to lead to conflicts with the union, which demands minimal job cuts.
Homeplus predicts that it will be able to turn a profit in operating profit starting from 2029. The reorganization plan specifies expected sales of 4.1199 trillion won and an operating profit of 124.1 billion won for 2029. Expected operating profit for 2037 is estimated at 218.2 billion won. Since profits in the range of 150 billion to 200 billion won are expected annually after turning profitable, the company explains that it can fully repay the loan interest, which is estimated at an average of about 72 billion won per year during this period.
Homeplus determined that the root cause of its management difficulties was excessive borrowing and included a management policy in this reorganization plan to manage future interest payments so they do not exceed one-third of operating profit.
Homeplus has been tasked with increasing sales by more than 20% within a year through the operation of the remaining 67 stores and improving its operating profit/loss by at least 130 billion won. Even if the court approves the reorganization plan, drastic self-help measures will be unavoidable for the time being. Homeplus also decided to continuously pursue mergers and acquisitions (M&A) during the reorganization process.
Next month on the 2nd, creditors and security right holders are scheduled to deliberate on the reorganization plan at a meeting of interested parties. If the creditor group opposes the reorganization plan on this day, Homeplus's reorganization proceedings will be cancelled. In such a case, there is a possibility that liquidation (bankruptcy) procedures will follow. Even if the reorganization plan is approved, if Homeplus faces difficulties in normalizing its management and the scale of losses to public interest bonds increases, Homeplus may abandon the reorganization plan on its own.
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