SEOUL, January 23 (AJP) - South Korea’s retail chain Homeplus has confirmed the closure of additional stores as the company undergoes court-led rehabilitation, raising fresh concerns about its financial condition.
Industry sources said on Friday that Homeplus informed staff in an internal notice the previous day of plans to shut its Jamsil store in Seoul and its Sungui store in Incheon. A Homeplus official said the timing of the closures has yet to be set, adding that both outlets are leased locations affected by lease expirations and ongoing operating losses.
Homeplus has said its cash flow has continued to deteriorate since entering rehabilitation proceedings. In August last year, the company announced plans to close 15 loss-making leased stores after failing to secure rent reductions, though it later suspended the move on the condition that transaction terms would be eased.
The latest closures add to a growing list of store shutdowns. Homeplus recently said it would halt operations at seven locations around the country. In December, it closed five stores. A further five stores are also scheduled to close on Jan. 31.
Under a rehabilitation plan submitted to the court, Homeplus plans to shut 41 loss-making stores over the next six years.
Concerns among employees have also grown after wages for January were not paid due to the company’s cash shortage. Homeplus has applied for an emergency debtor-in-possession loan of 300 billion won ($205 million), with 100 billion won each expected from private equity owner MBK Partners, its largest creditor Meritz, and state-run Korea Development Bank.
MBK has indicated it will participate in the financing, but it remains unclear whether the remaining funds will be secured.
“If the emergency operating loan is provided, we will use it as a catalyst for rehabilitation to overcome the liquidity crisis and carry out our structural reform plan without disruption to improve business viability,” Homeplus said in a statement.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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