SEOUL, August 07 (AJP) - Shelves stood about 30 percent stocked, by the company's own count, when 67 Homeplus stores reopened across South Korea on Friday, 25 days after the country's second-largest hypermarket chain ran out of cash to keep them running. A court in Seoul will decide within four weeks whether the company survives.
Homeplus called Friday's reopening a soft opening rather than a return to normal trading at the 67 big-box stores, which combine a full supermarket with floors of clothing and household goods. Checkout systems, deliveries and stock control are being tested in live conditions through Aug. 12, and the stores are scheduled to open fully on Aug. 13. The company said the rest of its goods would arrive before then.
The Seoul Bankruptcy Court has set Sept. 4 as the deadline for creditors to approve a rehabilitation plan under South Korea's court-supervised restructuring process, and the law permits no further extension. A meeting of creditors to vote on the plan is expected between late this month and early September.
The stores reopened on borrowed money. Meritz Financial Group, the company's largest creditor, transferred a 200 billion won loan, about $141 million at Friday's exchange rate, this week. The court had terminated the rehabilitation on July 3 after Homeplus failed to raise that amount on its own, and every store shut on July 13. The company appealed on July 20, the final day available, after its owner MBK Partners and the firm's chairman, Kim Byung-ju, guaranteed the Meritz loan in full. The court reversed itself the next day.
Members of the Korean Mart Labor Union's Homeplus branch appeared at the National Assembly press briefing room on Friday alongside lawmakers from the Democratic Party of Korea, the Rebuilding Korea Party, the Progressive Party and the Social Democratic Party, and asked the public to shop at the reopened stores.
"Homeplus, which was on the verge of liquidation because of the irresponsible greed of speculative capital, reopened its doors today," they said.
The phrase pointed at MBK Partners, the private equity firm that has owned Homeplus since 2015.
The company, now fighting for its survival, spent most of its 28 years as a fixture of South Korean life. Samsung C&T opened the first Homeplus in Daegu on Sept. 4, 1997, months before the Asian financial crisis forced Samsung to hand control to Britain's Tesco. The chain grew into one half of a duopoly with Emart, absorbing the former Carrefour stores in 2008 after both Carrefour and Walmart gave up on the market, until Tesco's accounting scandal pushed it to sell Homeplus to MBK for 7.2 trillion won, about $6.4 billion at the time and the largest buyout in South Korean history.
Homeplus has said 2.7 trillion won of that price was borrowed against its own shares. The debt came due just as Coupang's overnight grocery delivery, launched nationwide in 2019 and supercharged by the pandemic, redrew how South Koreans shop. Hypermarkets' share of retail sales fell from 15.1 percent in 2021 to 9.8 percent last year, while online purchases accounted for more than 60 percent of total retail sales by March this year. Homeplus filed for rehabilitation in March last year, suspended 37 of its 104 hypermarkets in May, and sold its convenience-supermarket chain in June.
The plan before creditors is to rebuild the company as a smaller entity. Homeplus intends to cut multi-story stores down to single floors of about 3,300 square meters and stock them with food, household essentials and its own private-label goods, a format the company has compared to the American chain Trader Joe's.
Homeplus said traffic to its membership app reached 100,000 visitors after it announced the reopening date, above the level of a year earlier. Should creditors reject the plan, or fail to vote by Sept. 4, Homeplus enters bankruptcy proceedings regardless of how much money sits in its accounts.
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