Seoul: Some local companies have suspended or are considering suspending the supply of their goods to retail giant Homeplus Co., which abruptly filed for a court-led rehabilitation process amid liquidity worries, industry sources said Thursday.
According to Yonhap News Agency, Homeplus entered the rehabilitation process Tuesday after a Seoul court approved the request by MBK Partners, the private equity fund that owns the discount store chain. The decision came after some local credit rating firms downgraded the company's rating.
Many companies are continuing to supply products to the retailer as there is no clear evidence of an immediate liquidity crisis. However, some suppliers are taking a cautious approach due to concerns that Homeplus would be unable to pay for the delivered goods, according to the sources.
Home appliance giant LG Electronics Inc. has suspended shipments of its products to Homeplus, citing rising financial risks. Samsung Electronics Co. is reportedly considering halting its supply to Homeplus. Additionally, some major food companies, including CJ Cheiljedang Corp., Ottogi Corp., Daesang Corp., and Nongshim Co., are taking similar measures.
"Some deliveries of our products have been suspended because we have not been paid," said an official from one of the food companies, asking for anonymity. "If they don't pay, we will stop supplying our products to Homeplus entirely."
Homeplus, however, said it is making continuous efforts to maintain normal operations. "We are aware that some of our suppliers are reviewing their supply plans, but we will do our best to persuade them to continue to supply their products," a Homeplus official said.