Emart plans buyback plus sale and leaseback program

2019.08.13 13:58:20 | 2019.08.13 16:12:21

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South Korea’s top grocery chain Emart Inc. under Shinsegae Group that incurred its first-ever deficit in the second quarter in the face of stagnant economy and challenge from online players, announced a buyback scheme worth 100 billion won ($82 million) and sale or leasing of retail outlets in the scale of 1 trillion won to build ammunition for new growth.

Emart announced Tuesday that it will buy 900,000 shares amounting to 3.23 percent of outstanding shares worth 94.95 billion won by November 12. The buyback will take place from August 14 to November 13. The buyback is the first since the retailer was spun off from Shinsegae Corp. in 2011.

The news lifted Emart shares by 7.11 percent from the previous session to 113,000 won Tuesday. The move came as the stock skidded to a 52-week low after the retailer delivered its first losses in the quarter ended in June.

The company said the buyback is aimed at boosting performance of its “excessively undervalued” stocks and enhancing shareholder returns. It also added the decision was made based on the confidence on the company’s bright future growth outlook, and it will keep working hard to strengthen benefits of shareholders by implementing various strategies including diversifying business portfolio, renovating existing outlets and expanding specialty stores.

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Earlier this year, Shinsegae Group Vice Chairman Chung Yong-jin bought 140,000 shares in Emart worth 24.1 billion won in the market from March 27 to April 4 in show of responsible management efforts.

Separately, the country’s largest big-box store chain will sign a memorandum of understanding with KB Securities Co. to conduct sale and leaseback transactions, a deal in which an owner sells an asset or property to a leasing firm and leases it back on a long-term to secure liquidity. After ironing out the details of the arrangement estimated to be worth around 1 trillion won with KB Securities, Emart will complete the deal within this year to sell 10 or more stores and lease them back. The company plans to use the capital to enhance its financial soundness.

By Lee Han-na and Choi Mira

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