Struggling Homeplus seeks new owner as bankruptcy court approves merger deal

Embattled Homeplus, currently under the court’s supervision, is on the lookout for a new owner as the Seoul Bankruptcy Court has granted approval for a “prepackaged M&A.” This move comes before the court gives the green light to a rehabilitation plan for the company. Leading the sales advisory team is Samil PwC.

The court has stated that the objective of this M&A process is to repay both secured and unsecured creditors promptly, in addition to selling the company under favorable terms for stakeholders, including creditors and employees. With the court’s go-ahead, Homeplus will begin collaborating with a potential buyer to draft a new rehabilitation plan aimed at restoring the company’s normal functioning.

Earlier on, Homeplus hosted a meeting for creditors at its headquarters in Gangseo District, western Seoul, where it declared its intention to apply for a prepackaged M&A. This decision follows Samil PwC’s findings in a due diligence report, indicating that the company’s liquidation value surpasses its going-concern value.

According to Samil PwC, Homeplus’ going-concern value was evaluated at 2.5 trillion won ($1.83 billion), while its liquidation value was pegged at 3.7 trillion won. This reflects a difference of 1.2 trillion won in favor of liquidation. The higher liquidation value is attributed to the significant real estate assets owned by the company, totaling 6.8 trillion won.

As per the industry terminology, liquidation value implies the total worth of a company’s assets minus its liabilities, whereas the going-concern value represents the anticipated total free cash flow the company can generate over the next decade.

In a bid to revive its operations, Homeplus is diligently working towards securing a new owner through the prepackaged M&A process. This strategic move has been initiated with the aim of swiftly repaying creditors, both secured and unsecured, and facilitating the sale of the company in a manner that benefits all stakeholders involved. By seeking new ownership under favorable terms, Homeplus aims to regain stability and normalize its business operations.