Four vying to buy ailing Asiana Airlines

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Four vying to buy ailing Asiana Airlines

Asiana Airlines' total debt was estimated at around 9 trillion won ($8 billion) in June. / Yonhap
By Jhoo Dong-chan

Four parties are expected to compete to take over the debt-ridden Asiana Airlines after being shortlisted as candidates, according to the financial authorities and industry sources, Tuesday.

They are Aekyung, Mirae Asset Daewoo-Hyundai Development Company, the Korea Corporate Governance Improvement (KCGI)-Banker Street consortium and Stonebridge Capital.

Rumors alleged that big-name conglomerates such as SK, Hanwha and CJ were interested in acquiring the nation's second-largest carrier, but none decided to join the bidding.

However, Kumho Engineering & Construction (E&C), Asiana's holding company, and the airline's creditors don't appear to have given up hope of a conglomerate bid.

"This is obviously a disappointing situation for Kumho E&C and the airline's creditors," an industry insider, who asked not to be named, said. "They had expected at least one or two big-name conglomerates would participate.

"Those consortiums led by brokerages or private equity funds will seek to acquire Asiana at the lowest price possible and then sell it to the highest bidder in the future. This isn't what Kumho is looking for. I am sure Kumho and the creditors are not content with the current bids."

In an effort to raise the sale price, Kumho E&C and Asiana's creditors are considering allowing parties who did not participate in the preliminary bid to join the main bid slated for October.

"This is just not fair," said an unnamed official of one of the shortlisted firms. "The preliminary bid seems like little more than formality, poking around to grasp a possible price range. This doesn't really feel good."

Big-name domestic firms are also reluctant to buy Asiana Airlines, citing the airline's tremendous debt and prevailing skepticism in the global airline industry.

"We are not interested in acquiring Asiana," SK Telecom President and CEO Park Jung-ho said last week. "SK Group is focusing on future technology-related businesses. The airline industry isn't one of them."

Korea Development Bank Chairman Lee Dong-gull admitted big-name conglomerates are unlikely to join the main bid next month.

"Under the current situation, it's highly unlikely," he said.

Asiana Airlines' total debt was estimated at around 9 trillion won ($8 billion) in June, versus 7.1 trillion won last December.

The carrier's market value is estimated at about 1.2 trillion won and the deal includes budget carrier affiliates Air Busan and Air Seoul. The entire deal is estimated at around 1.6 trillion won if management rights are included.

The firm's share price closed at 5,400 won Tuesday, down 10 won from the previous session.


Asiana Airlines' total debt was estimated at around 9 trillion won ($8 billion) in June. / Yonhap
By Jhoo Dong-chan

Four parties are expected to compete to take over the debt-ridden Asiana Airlines after being shortlisted as candidates, according to the financial authorities and industry sources, Tuesday.

They are Aekyung, Mirae Asset Daewoo-Hyundai Development Company, the Korea Corporate Governance Improvement (KCGI)-Banker Street consortium and Stonebridge Capital.

Rumors alleged that big-name conglomerates such as SK, Hanwha and CJ were interested in acquiring the nation's second-largest carrier, but none decided to join the bidding.

However, Kumho Engineering & Construction (E&C), Asiana's holding company, and the airline's creditors don't appear to have given up hope of a conglomerate bid.

"This is obviously a disappointing situation for Kumho E&C and the airline's creditors," an industry insider, who asked not to be named, said. "They had expected at least one or two big-name conglomerates would participate.

"Those consortiums led by brokerages or private equity funds will seek to acquire Asiana at the lowest price possible and then sell it to the highest bidder in the future. This isn't what Kumho is looking for. I am sure Kumho and the creditors are not content with the current bids."

In an effort to raise the sale price, Kumho E&C and Asiana's creditors are considering allowing parties who did not participate in the preliminary bid to join the main bid slated for October.

"This is just not fair," said an unnamed official of one of the shortlisted firms. "The preliminary bid seems like little more than formality, poking around to grasp a possible price range. This doesn't really feel good."

Big-name domestic firms are also reluctant to buy Asiana Airlines, citing the airline's tremendous debt and prevailing skepticism in the global airline industry.

"We are not interested in acquiring Asiana," SK Telecom President and CEO Park Jung-ho said last week. "SK Group is focusing on future technology-related businesses. The airline industry isn't one of them."

Korea Development Bank Chairman Lee Dong-gull admitted big-name conglomerates are unlikely to join the main bid next month.

"Under the current situation, it's highly unlikely," he said.

Asiana Airlines' total debt was estimated at around 9 trillion won ($8 billion) in June, versus 7.1 trillion won last December.

The carrier's market value is estimated at about 1.2 trillion won and the deal includes budget carrier affiliates Air Busan and Air Seoul. The entire deal is estimated at around 1.6 trillion won if management rights are included.

The firm's share price closed at 5,400 won Tuesday, down 10 won from the previous session.


Jhoo Dong-chan jhoo@koreatimes.co.kr


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