Liquidation Value Exceeds Going-Concern Value by 1.2 Trillion Won
"Pre-Approval M&A" to Be Pursued
If Approved, Submission of Rehabilitation Plan to Be Delayed Until After M&A
The liquidation value of Homeplus, which is currently undergoing rehabilitation proceedings, has been found to be higher than its going-concern value. As a result, Homeplus plans to pursue a "pre-approval M&A" by submitting a request to the court on June 13.
Samil PwC, the court-appointed examiner, held a "report briefing session" for creditors at the Homeplus headquarters on June 12. This session was organized to explain the contents of the investigation report and the future course of action to the creditors, following the submission of the report?which was compiled over three months since March?by the examiner to the court.
The investigation report identified three main reasons for Homeplus entering rehabilitation proceedings: a business structure in which costs of a fixed nature have been continuously increasing; the impact of the COVID-19 pandemic and the shift of the retail distribution industry to online channels; and the potential for a liquidity crisis due to a downgrade in credit rating. Each of these factors was cited as an independent cause.
The investigation found that the "going-concern value," which is the present value of surplus cash flows Homeplus would generate over the next ten years, stands at 2.5 trillion won. However, with liabilities (2.9 trillion won) exceeding assets (6.8 trillion won), the liquidation value was calculated at 3.7 trillion won. This means the liquidation value is 1.2 trillion won higher than the going-concern value.
Accordingly, the Homeplus court-appointed administrator announced plans to apply for a "pre-approval M&A" to the court on June 13, based on the examiner's recommendation. If the court approves this, the submission of the rehabilitation plan, which was originally scheduled for July 10, will be postponed until after the M&A is completed.
A Homeplus representative explained, "If the 'pre-approval M&A' proceeds successfully, the creditors will be able to recover their claims early through new funds brought in by the acquirer. We also expect that the continued operation of Homeplus will enable not only job security for employees but also stability for partner companies, allowing for a swift normalization across all areas."
The administrator plans to submit an opinion to the court stating that the going-concern value is higher than the liquidation value.
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