LG Electronics Halts Supplies to Homeplus... Samsung Also Considering

LG temporarily halts product shipments: "Risk response"
Samsung internally discussing whether to continue supply
Growing concerns among partners amid liquidity crisis rumors

LG Electronics has decided to temporarily suspend product deliveries to Homeplus, which has entered corporate rehabilitation proceedings. Samsung Electronics has also begun internal discussions on whether to continue supplying mobile phones and home appliances. This decision comes amid growing liquidity concerns, raising doubts about whether payment settlements will be properly made.

A Homeplus store in downtown Seoul. Photo by Yonhap News

Following the suspension of Homeplus gift card partnerships by several affiliated companies, there are concerns that if offline product supplies are also cut off, transactions may cease, potentially leading to a second Tmon and Wemakeprice (Timep) crisis. Additionally, investors who purchased commercial paper (CP) and electronic short-term bonds face the risk of losses amounting to hundreds of billions of won, intensifying the aftershocks of the workout.

According to industry sources on the 6th, LG Electronics has temporarily halted shipments of products supplied to Homeplus. An LG Electronics representative stated, "We have temporarily suspended shipments as a risk response measure. However, we are discussing normalization plans to minimize customer inconvenience."

Samsung Electronics, which has supplied home appliances and mobile phones to Homeplus, is also reviewing whether to continue product supply to Homeplus stores following the initiation of rehabilitation proceedings on the 4th. A Samsung Electronics representative said, "We have not stopped supply immediately, but since it is uncertain whether payments will be received on time, we plan to coordinate and decide on future operational plans with Homeplus, focusing on the relevant departments."

Rumors have already circulated among Homeplus employees that Samsung and LG will soon withdraw their products from stores. However, Homeplus stated, "Although the court specified that 'general commercial claims with partner companies will be 100% repaid' when deciding to initiate rehabilitation proceedings, some partner companies appear to have reacted sensitively due to concerns about uncertainties. We expect to resolve this through sufficient communication with the relevant partners."

The scale of Homeplus's debt restructuring targets approximately 2 trillion won, including 1.2 trillion won from Meritz Financial, 110 billion won in bank credit lines, 250 billion won in commercial paper, and 350 billion won in accounts payable securitization funds. With the initiation of rehabilitation proceedings, repayment of financial claims is deferred, making loan recovery difficult for the financial sector for the time being. Homeplus maintains that its real estate assets amount to about 4.7 trillion won, and once the rehabilitation plan is confirmed, negotiations with financial creditors will not be difficult.

For now, the focus is on protecting commercial claims and stabilizing online and offline operations, but concerns about liquidity risks persist. In fact, it is reported that some tenants operating stores within Homeplus did not receive timely settlements for January sales. According to rehabilitation procedures, funds for repaying commercial claims must be reported to the court, causing delays.

Moreover, it has been revealed that Homeplus issued 5 billion won in commercial paper (CP) and 2 billion won in electronic short-term bonds just before applying for rehabilitation proceedings on the 21st of last month, drawing criticism. According to the Korea Securities Depository's securities information portal, as of the 4th, Homeplus's outstanding CP and electronic short-term bonds amount to approximately 194 billion won, with CP outstanding at 116 billion won and electronic short-term bonds at 78 billion won. The financial investment industry raises concerns that investors who purchased CP and electronic short-term bonds may incur losses. Previously issued CP and electronic short-term bonds appear to have been sold to retail investors through securities firms. Immediate maturities this month total 29.5 billion won, followed by 40.5 billion won in April, 50 billion won in May, 42 billion won in June, and 12 billion won in August.

Meanwhile, the Homeplus branch of the Korean Confederation of Trade Unions Mart Industry Labor Union held a press conference in Gwanghwamun, Seoul, on the morning of the same day to condemn the situation, stating, "The amount MBK borrowed to acquire Homeplus has resulted in enormous financial costs (interest on borrowings, etc.), severely deteriorating Homeplus's management condition," and urged, "MBK must take responsibility for Homeplus's rehabilitation."