Agreement Reached to Resume Product Supply from the 21st
Seoul Milk Disagrees Over Payment Cycle and Advance Payment Requests
Nongshim, which had temporarily suspended deliveries to Homeplus, decided to normalize product supply starting from the 21st.
According to both companies on the 20th, Nongshim agreed to resume the temporarily suspended deliveries to Homeplus from the previous day. Previously, Nongshim had not supplied products such as ramen to Homeplus due to disagreements over delivery conditions. There was a conflict of opinions between Nongshim, which requested advance payment due to concerns over delayed settlement of delivery payments caused by Homeplus entering corporate rehabilitation proceedings, and Homeplus. However, it is reported that a compromise was reached through discussions among the working-level staff.
However, Seoul Milk, which also stopped supplying products to Homeplus from that day, has not yet decided to resume deliveries. A Seoul Milk official stated, "We are requesting to shorten the existing payment settlement cycle and to make payments in advance, but no agreement has been reached with Homeplus," adding, "We plan to resume deliveries once a compromise is found through continued negotiations."
Homeplus said, "As a partner company with whom we have cooperated for a long time based on mutual trust, we will communicate well about the current situation and aim to complete an agreement as soon as possible."
Meanwhile, according to the Democratic Party’s Euljiro Committee (Chairman Min Byung-duk) and the Homeplus Task Force (TF) for countermeasures, Homeplus faced a cash shortage of 18.4 billion KRW on the 17th of this month due to difficulties in short-term fund procurement caused by a downgrade in credit ratings by credit rating agencies. It was confirmed that Homeplus applied for rehabilitation proceedings, anticipating a cash shortfall reaching 739.5 billion KRW by the end of May.
According to Homeplus’s application for commencement of rehabilitation proceedings, Homeplus stated, "Korea Ratings and Korea Investors Service downgraded the company’s credit rating from A3 to A3-, making it impossible to expect new issuance of purchase and operating payment securitization and commercial paper. We cannot refinance the already issued 648.9 billion KRW of purchase and operating payment securitization and short-term commercial paper, so the company’s available cash is expected to be rapidly depleted." Furthermore, they claimed that with the commencement of rehabilitation, repayment of financial debts would be deferred, and if trade debts prior to 20 days before the rehabilitation application date are not paid, the cash holdings are expected to increase from 130 billion KRW on the 1st of this month to 277.9 billion KRW by the end of May.
Homeplus explained, "This assumes the most extreme scenario, and the court also recognized this, deciding to initiate rehabilitation proceedings to prevent the anticipated cash shortage in May in advance." As of the morning of that day, Homeplus had paid 386.3 billion KRW in trade receivables, including delivery payments to partner companies and settlement payments to tenants. This amount increased by 10.3 billion KRW in one day from 376 billion KRW the previous morning.
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