Unpaid Leave for Headquarters Employees and Partial Return of Executive Salaries
"Rehabilitation Through M&A Is in Jeopardy"... Self-Rescue Measures Implemented
On August 13, Homeplus announced that it would begin sequentially closing 15 stores where there has been no progress in rent adjustment negotiations, as part of a company-wide emergency survival management system. This decision comes five months after the commencement of rehabilitation proceedings, as the management environment has not improved and financial pressures have intensified, prompting the company to implement strong self-rescue measures.
The self-rescue measures include: sequential closure of 15 stores where rent adjustment negotiations have stalled; implementation of an unpaid leave system for headquarters employees; and continuation of partial executive salary reductions, which have been in effect since the start of rehabilitation proceedings in March. Homeplus plans to maintain these measures until a pre-approval merger and acquisition (M&A) is successfully completed.
Since the initiation of rehabilitation proceedings on March 4, Homeplus has continued normal operations at all stores nationwide and has maintained employment for all employees. The company has also continued to pay all supplier invoices incurred after the start of the rehabilitation process on time.
However, it has been confirmed that Homeplus's financial situation has not clearly improved even after five months since the start of rehabilitation. Due to declining trust, some major suppliers have shortened settlement cycles, reduced transaction limits, and increasingly demanded advance payments and new deposits, which has worsened cash flow. In addition, the exclusion of large supermarkets from the list of eligible outlets for the national cost-of-living support payment in July has further widened the decline in Homeplus's sales.
Jo Jooyeon, Co-CEO of Homeplus, sent a message to all employees on this day, stating, "If the current situation continues, the very survival of the company through a pre-approval M&A could be in jeopardy. We can no longer delay and have entered a last-resort survival management phase."
Homeplus is focusing its efforts on achieving a pre-approval M&A before the rehabilitation plan is approved. A pre-approval M&A involves selling the company before the rehabilitation plan is approved, which can help secure a buyer early and minimize the decline in corporate value. On July 30, about 22,000 Homeplus employees and partner company staff delivered a petition to the president, appealing for the government's active attention and support for the company's early normalization and successful pre-approval M&A.
The Hanmaeum Council, Homeplus's labor-management council and employee representative body, emphasized, "The longer the rehabilitation process is prolonged, the more the corporate value declines and the lower the chances of recovery become. Therefore, a pre-approval M&A must be achieved."
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