Homeplus, which is undergoing corporate rehabilitation proceedings, is starting a second round of restructuring by temporarily suspending operations at 37 low-contribution hypermarket stores and urged its largest creditor, Meritz Financial Group, to provide emergency funding.

Homeplus said on May 8 it signed a sale contract on May 7 with NS Shopping, the preferred bidder for the sale of its supermarket unit, Homeplus Express.

Homeplus said it believes the Express sale alone will not be enough to fully cover operating funds needed to win approval for its rehabilitation process and financing to normalise remaining business units, including hypermarkets, online operations and headquarters. It will pursue both store-operations efficiency and additional liquidity.

From May 10 to July 3, about two months, it will temporarily suspend operations at 37 low-contribution stores out of its 104 hypermarkets. It plans to supply limited goods intensively to the remaining 67 core stores to prevent a sales drop and customer churn. Employees at the 37 stores will receive on average 70 percent of their wages as shutdown allowances, and those who want to can be reassigned to other stores. Mall tenants inside those stores will continue normal operations.

To secure operating funds, Homeplus requested support from Meritz for a bridge loan and new debtor-in-possession (DIP) financing, but has yet to receive a specific response.

Homeplus said Meritz holds as collateral 68 Homeplus store properties worth about 4 trillion won, four times the roughly 1.2 trillion won in loans, and that securing funds is fundamentally impossible without Meritz's consent. It appealed that rehabilitation is effectively impossible without Meritz's funding support, as Meritz holds collateral over virtually all assets that can be converted to cash.

It added that if the rehabilitation process is halted because funds are not provided in a timely manner, social costs such as large-scale employment instability, damage to partner companies and a contraction in local commercial districts could increase. It said it hopes Meritz will make a forward-looking decision as an inclusive financial institution.

Homeplus plans to soon submit to the court a revised rehabilitation plan reflecting creditors' demands, including steps such as improving store-operation efficiency, suspending operations at some stores and options for mergers and acquisitions of remaining business units. The company plans to improve the viability of its remaining business units, then repay unpaid claims after a third-party sale.