Seoul: The main creditor of Homeplus Co. has decided to extend new funding worth 200 billion won (US$134 million) to the cash-strapped discount store chain, which was forced to temporarily close its outlets earlier this week due to a lack of operating capital.

According to Yonhap News Agency, the decision followed an agreement by Meritz Financial Group to provide the funding in exchange for a full guarantee from private equity fund MBK Partners, the sole owner of Homeplus. This development comes after a court recently moved to terminate rehabilitation proceedings for the company, intensifying the risk of closure as it continues to search for a prospective buyer.

Earlier this month, the Seoul Bankruptcy Court rejected Homeplus' revised rehabilitation plan, citing the company's failure to secure at least 200 billion won necessary to implement the plan. However, with the infusion of fresh capital, Homeplus now has the opportunity to appeal the court's decision to terminate its rehabilitation.

Homeplus has been grappling with financial difficulties due to a downturn in the discount store sector, leading to court-led rehabilitation proceedings that began in March of last year. MBK Partners acquired Homeplus from British retailer Tesco Plc in 2015, purchasing a full stake for 7.2 trillion won.

At its height, Homeplus was South Korea's second-largest discount store chain, operating over 140 stores across the nation. However, as the discount store industry has declined, Homeplus' financial health worsened, resulting in the need for court-supervised rehabilitation. Efforts to secure additional funds have been complicated by a long-standing dispute over responsibility between MBK Partners and Homeplus' largest creditor.