Airlines
KDB offers to ease HDC's financial burden in Asiana takeover as deal stalls
Sang-eun Lucia Lee and Kyung-Min Kang
State-run Korea Development Bank (KDB), the main creditor of Asian Airlines Inc., has unveiled proposals to ease the financial burden for HDC Hyundai Development Co. to acquire the beleaguered airliner. The deal was heading toward a collapse after the potential buyer apparently walked away from negotiations, demanding a change in acquisition terms.
During a meeting with HDC Chairman Chung Mong-gyu late on August 26, KDB Chairman Lee Dong-gull offered further loans to the preferred buyer, following already extended financial assistance worth 800 billion won in the form of perpetual bonds. According to sources at the creditor bank, KDB is considering 700 billion won in fresh loans, bringing the total to 1.5 trillion won.
That would help HDC to reduce its rights offering size to 1.5 trillion won from the original 2.2 trillion won it promised earlier to lower Asiana’s debt ratio when it takes over the carrier.
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The latest meeting came after two other meetings between Chung and Lee to discuss ways to revive the deal fell through.
In December,
the HDC-led consortium signed a deal to acquire a 30.77 percent stake in Asiana Airlines from Kumho Industrial Co., a construction unit of Kumho Asiana Group, for 2.5 trillion won (US$2.2 billion), including 2.2 trillion won in new shares to be issued.
The deal was meant to be completed by June, but was delayed due to a new coronavirus outbreak. HDC wanted another 12-week round of due diligence on Asiana Airlines to ascertain the carrier's financial status amid the pandemic. But creditors and Kumho Industrial balked at the request.
HDC also cited the airline's snowballing debt as a factor in the renegotiations.