[비즈한국] Homeplus, which entered rehabilitation procedures last March, has finally found potential buyers. However, due to the weak financial standing of the companies involved, some suspect that the selection of these bidders is merely a "stalling tactic" to extend the deadline for submitting a rehabilitation plan. The problem is that Homeplus's operating funds are likely to run out by the end of this month, meaning even this stalling strategy is reaching its limits.
Small and medium-sized enterprises jump into the Homeplus acquisition race, raising questions about capability
The public bidding for Homeplus, which had even raised fears of "zero bids," ultimately attracted two participants. The companies that submitted Letters of Intent (LOI) are the AI fintech firm "Harex InfoTech" and the real estate leasing and development company "Snowmad." With potential buyers appearing, Homeplus appears to have avoided an immediate liquidation crisis for now.
With the emergence of potential buyers, concrete schedules such as preliminary due diligence and final bidding have been set. The two companies will conduct preliminary due diligence until the 21st, and if they intend to proceed, they will submit their final bid proposals by the 26th. Consequently, the court has also extended the deadline for Homeplus to submit its rehabilitation plan. On the 7th, the Seoul Bankruptcy Court announced it would extend the deadline from the original date of November 10 to December 29.
Homeplus, which had been pushed to the brink, has narrowly bought some time by finding potential buyers. However, the industry remains skeptical that this acquisition race will lead to an actual turnaround. Concerns stem from the fact that both companies lack any experience in the retail sector and appear to have weak financial capabilities.
Harex InfoTech, founded in 2000, is an AI fintech company that operates the mobile financial payment service UBpay. Last year, the company recorded 300 million won in revenue and an operating loss of 3.3 billion won. This is a tiny scale compared to Homeplus's annual revenue of 7 trillion won. The company's financial state is also deteriorating; its capital, which stood at 8.7 billion won in 2021, fell to negative 1.8 billion won by the end of last year, putting it in a state of complete capital impairment. The number of employees, which was 38 according to National Pension Service records last May, dropped to 6 as of April this year.
The other potential buyer, Snowmad, is a real estate leasing and development company founded in 2007. As of last year, Snowmad recorded 11.6 billion won in revenue and 2.5 billion won in operating profit, showing relatively stable performance. However, out of 159.7 billion won in total assets as of the end of last year, 137.5 billion won consisted of debt, resulting in a debt-to-equity ratio of 860%.
Industry experts suggest that there may be other motives for these two companies, which lack sufficient acquisition capacity, to enter the Homeplus bidding process. While the prevailing interpretation is that it is a strategy to gain publicity, some suspect that MBK Partners may have put these companies forward as a "stalling card" to secure an extension on the rehabilitation plan submission deadline. An industry source stated, "There is a strong suspicion that MBK scouted these potential buyers with the intention of extending the deadline for the rehabilitation plan," adding, "Even if potential buyers have appeared, the current situation for Homeplus is not hopeful."
The lead manager for the Homeplus sale stated that although the preliminary bidding has closed, they plan to continue discussions with additional potential buyers until the final bidding scheduled for the 26th of this month. A Homeplus official remarked, "The possibility of additional bids remains open until the final bidding date."
Homeplus, drained of capital, can it make it past the end of this month?
Although the deadline for the Homeplus rehabilitation plan was extended by about 50 days, the dominant analysis in the industry is that the remaining time is practically only until the end of this month. While the court's decision extended the deadline on paper, operating funds have been depleted to a level that can only last until the end of this month. Currently, Homeplus is barely managing to cover payments to suppliers and labor costs with store sales. However, as sales continue to decline, the financial crunch is worsening. If operating funds run out by the end of this month, it will be virtually impossible for Homeplus to continue operations. In such a case, the court could consider terminating the rehabilitation process and converting it to liquidation even before the submission of the rehabilitation plan.
A Homeplus employee added, "Under court receivership, we cannot raise funds from external sources, so we are covering operating expenses, such as payments to suppliers and employee wages, with sales revenue. However, as the possibility of store closures grows, consumer traffic is dropping, and store sales are falling. Operating funds are also being depleted rapidly."
A Homeplus union official also said, "If you fall behind on electricity bills by more than three months, the supply is cut off, and we are already two months behind. We have been barely paying one month's worth to prevent a power outage, but even that will be difficult this month." He added, "There is great anxiety among employees about whether salaries will be paid properly this month. It feels like a vicious cycle where if we pay wages, we can't pay for goods, then deliveries are cut off, and sales drop further. As operating funds run out, there is a strong sense within the company that the end of this month is, in fact, the final threshold."
In response, Homeplus stated, "It is true that the financial situation has worsened as sales declined after the start of rehabilitation," but added, "Since the start of the rehabilitation procedures, payments to suppliers (excluding those classified as rehabilitation claims) and wages have been paid normally. We expect there will be no disruptions in payments this month."
The "Joint Countermeasure Committee for Resolving the Homeplus Crisis," which includes the Mart Industry Labor Union and civic groups, held the 2nd "National Rally to Save Homeplus" near the Presidential Office in Yongsan on the 8th. On that day, the union attempted to deliver a petition from citizens urging government intervention to the Presidential Office, but began an indefinite hunger strike when the government did not respond.
A labor union official met at the strike site on the 10th emphasized, "Today marks the third day of the hunger strike. If Homeplus is liquidated, 100,000 jobs will disappear. Partner companies will collapse, and local commercial districts will be shaken. This is a time that requires active government intervention."
The union also questioned the realistic possibility of an acquisition by the two companies that recently submitted LOIs. The aforementioned official stressed, "Both places appear to have neither the capacity nor the will to acquire. If they raise acquisition funds through borrowing, the burden of financial costs will make running the mart difficult again. There might even be an intention to sell off remaining real estate assets rather than operate Homeplus," adding, "The government must step in before the 26th, when final bidding is scheduled."