Creditor agrees to provide 200 billion won to Homeplus

The main creditor of Homeplus Co. decided Thursday to extend 200 billion won (US$134 million) in new funding to the discount store chain. The decision followed an agreement by Meritz Financial Group to provide the funds in exchange for a full guarantee from private equity fund MBK Partners, which owns the retailer.

The funding comes after the Seoul Bankruptcy Court terminated Homeplus' rehabilitation proceedings earlier this month. The court cited the company's failure to secure at least 200 billion won needed to carry out its revised plan. Homeplus temporarily suspended operations at several outlets earlier this week due to a lack of operating capital.

entered court-led rehabilitation proceedings in March last year after facing financial difficulties in the discount store sector. MBK Partners acquired the company in 2015 from British retailer Tesco Plc for 7.2 trillion won. At its peak, Homeplus operated more than 140 stores nationwide as the country's second-largest discount chain.

Its financial condition deteriorated amid industry weakness and a prolonged dispute over responsibility between MBK Partners and the company's largest creditor. Homeplus welcomed the new funding plan and said it will appeal the court's decision on Monday.

The company stated that labor unions, MBK Partners, and Meritz have agreed to continue the rehabilitation process based on mutual cooperation and concessions. The retailer said closed stores will resume operations after consultations with partner companies if the court accepts the appeal and extends the rehabilitation proceedings.