Homeplus Co., a discount store chain in South Korea (Image courtesy of Homeplus)
SEOUL, March 4 (Korea Bizwire) — Homeplus Co., a discount store chain in South Korea, said Tuesday it has filed for corporate rehabilitation with a Seoul court after its credit rating declined amid liquidity worries.
Homeplus filed for the court-led rehabilitation program with the Seoul Bankruptcy Court after its corporate credit rating plunged last week.
On Friday, Korea Investors Service and Korea Ratings Inc. lowered the credit rating of Homeplus’ corporate bonds to A3- from A3, citing the lack of efforts to improve its financial health.
“We have decided to file for the rehabilitation program as there existed a possibility of a short-term liquidity crisis. This move is part of our preemptive efforts to avoid a liquidity crisis,” a Homeplus official said.
The official argued the company’s improved debt-to-equity ratio and increased sales on online and offline stores were not reflected in the credit rating evaluation last month.
Homeplus currently operates 126 stores nationwide, down from 131 a year earlier.
Its outlets are in normal operation across the country despite its filing for the rehabilitation program.
In the fiscal year that ended in February 2024, the company’s operating losses narrowed to 199.42 billion won (US$137 million) from 260.18 billion won a year ago.
Homplus has reported continued operating losses due to the lack of competitiveness compared with its bigger rivals, such as Emart Inc., the country’s largest discount store chain.
In 2015, private equity fund MBK Partners acquired an entire 100 percent stake in Homeplus for 7.2 trillion won, including 4.3 trillion won in loans, from British retailer Tesco Plc.
Out of the 4.3 trillion-won loan, the company said it has paid back about 4 trillion won.
(Yonhap)
