Seoul: The main creditor of Homeplus Co. has announced a decision to extend fresh funding of 200 billion won (US$134 million) to the financially troubled discount store chain. This move comes in the wake of Homeplus temporarily closing 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 extend the funding, contingent upon a full guarantee by MBK Partners, the private equity fund that wholly owns Homeplus. This financial intervention arrives as a critical lifeline for the retailer after a court recently moved to terminate rehabilitation proceedings, pushing Homeplus closer to potentially closing its doors.

The Seoul Bankruptcy Court had previously rejected Homeplus' revised rehabilitation plan, citing the company's failure to secure the requisite 200 billion won necessary for the plan's execution. In response, Homeplus expressed optimism towards Meritz Financial Group's funding decision and plans to appeal the court's ruling to terminate its rehabilitation proceedings on the coming Monday.

Homeplus stated that labor unions, MBK Partners, and Meritz have reached an agreement to continue the rehabilitation process, emphasizing mutual cooperation and concessions. The company also indicated that its temporarily closed discount stores would resume operations following consultations with partner companies, contingent on the court's acceptance of its appeal and extension of the rehabilitation proceedings.

The retailer's financial woes stem from a broader downturn in the discount store industry, prompting it to enter court-led rehabilitation proceedings in March of the previous year. MBK Partners acquired Homeplus from British retailer Tesco Plc in 2015 for 7.2 trillion won, at a time when Homeplus was the country's second-largest discount store chain, operating over 140 stores nationwide.

However, a decline in the discount retail sector has severely impacted Homeplus' financial health, necessitating court-supervised rehabilitation. The company's efforts to secure additional funding were further complicated by an ongoing dispute over responsibility between MBK Partners and Homeplus' largest creditor.