Kumho Group puts Asiana Airlines up for sale

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Kumho Group puts Asiana Airlines up for sale

A model of an Airbus A380 airliner is displayed at Asiana Airlines headquarters in Gangseo-gu, Seoul, Monday, when its parent company Kumho Asiana Group announced it will sell the carrier to cope with a liquidity crisis. Yonhap

Hanwha, SK, CJ mentioned as potential buyer of Korea's No. 2 carrier

By Nam Hyun-woo

Former Kumho Asiana Group Chairman Park Sam-koo
Kumho Asiana Group has decided to dispose of its controlling stake in its flagship Asiana Airlines to avert a liquidity crisis facing Korea's second-largest carrier, the group said Monday.

SK, Hanwha, CJ and several other conglomerates have been mentioned as potential buyers for Asiana, which has been struggling under mounting debt amid rising costs and intensifying competition, according to industry analysts.

Kumho Industrial, the largest stakeholder in Asiana Airlines, said its board of directors decided to unload its 33.47 percent stake in the carrier, as part of the group's self-rescue plan to prevent a liquidity crisis.

Kumho Industrial is an intermediate holding firm of the group, in which Kumho Buslines, whose largest shareholder is former Kumho Group Chairman Park Sam-koo, holds a 45.3 percent stake.

"The decision was made for the sake of more than 10,000 Asiana Airlines employees," the group said in a statement. "We decided selling Asiana Airlines would be a way for the group and the carrier to regain market trust."

The group's main creditor, the Korea Development Bank (KDB), said former Chairman Park had a meeting with KDB Chairman Lee Dong-gull and asked for a 500 billion won loan from the state-run lender in return for selling the carrier.

In the plan, the stake will be available immediately either through selling existing shares or issuing new rights to the buyer. Also, the carrier's subsidiaries, such as Air Busan, Asiana IDT and others, will be sold together as a package.

Currently, the 33.47 percent stake, or 68.7 million shares, is worth approximately 300 billion won ($264.9 million) on the market. Adding in premiums for managing rights of the subsidiaries, the total value of the deal is expected to surpass 1 trillion won.

The decision to sell comes amid a group liquidity shortage while its debts are snowballing. At the end of last year, the company's total liability stood at 3.44 trillion won, 1.32 trillion won of which has to be paid by the end of the year.

The most urgent debt is 60 billion won in bonds that are due April 25. If the firm fails to repay the amount, its credit rating will drop to junk level, which will trigger creditors to call in loans worth nearly 1 trillion won before their maturity.

To cope with the debt, the group last week requested 500 billion won in funding from the KDB offering 4.8 percent of Kumho Buslines as security, but this was dismissed by the lender, which demanded a stronger self-rescue plan.

With the carrier up for sale, several large firms are being mentioned as potential buyers.

SK Group has been talked about since last year, when it hired former Jeju Air CEO Choi Kyu-nam as a member of its SUPEX council, the firms highest decision-making body, which reportedly discussed acquiring the carrier.

Hanwha Group is another most-mentioned candidate, because of its current business portfolio and history of investing into a low-cost carrier. Last year, the company was prepared to invest nearly 16 billion won into Aero K Airlines, but did not do so when the potential carrier failed to earn a license. The group's aircraft engine firm, Hanwha Aerospace, is Korea's only aircraft engine maker.

Both firms denied any intentions of buying the airline.

Aekyung Group, which owns Jeju Air, and CJ Group have also been mentioned as potential buyers.



A model of an Airbus A380 airliner is displayed at Asiana Airlines headquarters in Gangseo-gu, Seoul, Monday, when its parent company Kumho Asiana Group announced it will sell the carrier to cope with a liquidity crisis. Yonhap

Hanwha, SK, CJ mentioned as potential buyer of Korea's No. 2 carrier

By Nam Hyun-woo

Former Kumho Asiana Group Chairman Park Sam-koo
Kumho Asiana Group has decided to dispose of its controlling stake in its flagship Asiana Airlines to avert a liquidity crisis facing Korea's second-largest carrier, the group said Monday.

SK, Hanwha, CJ and several other conglomerates have been mentioned as potential buyers for Asiana, which has been struggling under mounting debt amid rising costs and intensifying competition, according to industry analysts.

Kumho Industrial, the largest stakeholder in Asiana Airlines, said its board of directors decided to unload its 33.47 percent stake in the carrier, as part of the group's self-rescue plan to prevent a liquidity crisis.

Kumho Industrial is an intermediate holding firm of the group, in which Kumho Buslines, whose largest shareholder is former Kumho Group Chairman Park Sam-koo, holds a 45.3 percent stake.

"The decision was made for the sake of more than 10,000 Asiana Airlines employees," the group said in a statement. "We decided selling Asiana Airlines would be a way for the group and the carrier to regain market trust."

The group's main creditor, the Korea Development Bank (KDB), said former Chairman Park had a meeting with KDB Chairman Lee Dong-gull and asked for a 500 billion won loan from the state-run lender in return for selling the carrier.

In the plan, the stake will be available immediately either through selling existing shares or issuing new rights to the buyer. Also, the carrier's subsidiaries, such as Air Busan, Asiana IDT and others, will be sold together as a package.

Currently, the 33.47 percent stake, or 68.7 million shares, is worth approximately 300 billion won ($264.9 million) on the market. Adding in premiums for managing rights of the subsidiaries, the total value of the deal is expected to surpass 1 trillion won.

The decision to sell comes amid a group liquidity shortage while its debts are snowballing. At the end of last year, the company's total liability stood at 3.44 trillion won, 1.32 trillion won of which has to be paid by the end of the year.

The most urgent debt is 60 billion won in bonds that are due April 25. If the firm fails to repay the amount, its credit rating will drop to junk level, which will trigger creditors to call in loans worth nearly 1 trillion won before their maturity.

To cope with the debt, the group last week requested 500 billion won in funding from the KDB offering 4.8 percent of Kumho Buslines as security, but this was dismissed by the lender, which demanded a stronger self-rescue plan.

With the carrier up for sale, several large firms are being mentioned as potential buyers.

SK Group has been talked about since last year, when it hired former Jeju Air CEO Choi Kyu-nam as a member of its SUPEX council, the firms highest decision-making body, which reportedly discussed acquiring the carrier.

Hanwha Group is another most-mentioned candidate, because of its current business portfolio and history of investing into a low-cost carrier. Last year, the company was prepared to invest nearly 16 billion won into Aero K Airlines, but did not do so when the potential carrier failed to earn a license. The group's aircraft engine firm, Hanwha Aerospace, is Korea's only aircraft engine maker.

Both firms denied any intentions of buying the airline.

Aekyung Group, which owns Jeju Air, and CJ Group have also been mentioned as potential buyers.



Nam Hyun-woo namhw@koreatimes.co.kr


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