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| Asiana Airlines headquarters in Gangseo-gu, Seoul / Yonhap |
By Nam Hyun-woo
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| HDC Hyundai Development Company Chairman Chung Mong-gyu walks into a hall for a press conference at the company's headquarters in Yongsan-gu, Seoul, Tuesday. Yonhap |
Though the purchase is expected to be completed without major hurdles, a number of remaining tasks awaits HDC after the acquisition, including ways to address the carrier's debt amounting to 9.6 trillion won ($8.25 billion) and a number of subsidiaries Asiana Airlines possesses.
According to Kumho Industrial, it selected the consortium as the preferred bidder in the sale of its 31 percent controlling stake in Asiana Airlines and new shares the carrier will issue in the future.
"Of three consortiums which took part in the bidding, the HDC-Mirae Asset consortium was seen as the best buyer to normalize Asiana Airlines' operation and enable its future growth," a Kumho Industrial official said, adding they will sign sales and purchase agreement by the end of this year.
HDC has been widely expected as the preferred bidder for Asiana Airlines, as the consortium reportedly presented 2.4 trillion won, outpacing its rivals including a consortium led by Aekyung which offered a price below 2 trillion won.
"As Asiana Airlines joins, HDC will become a mobility firm and we will spare no support for Asiana Airlines to have the most competitiveness," HDC Chairman Chung Mong-gyu said in a press conference.
Kumho Industrial said it and the HDC consortium will negotiate the details of the deal, which is expected to include transaction prices of existing and new shares.
Analysts said the prices of existing shares and new shares is one of the key talking points, because Kumho Industrial wants a high price in existing shares it will hand over to the consortium, while the consortium puts more value on new shares that Asiana will issue.
This is because the amount for the money for existing shares will be used for helping cash-troubled Kumho Industrial and Kumho Group, while the amount for new shares will be used for Asiana Airline's normalization.
During the conference, Chung said HDC will bet 2 trillion won to acquire new shares of Asiana Airlines to stabilize the carrier's financial status, meaning HDC is valuing the existing shares held by Kumho Industrial no higher than 400 billion won.
Another task for HDC is the stakes of Asiana Airlines subsidiaries. Since Kumho Industrial and its creditors including the Korea Development Bank offered the carrier and its 6 subsidiaries together in the deal, HDC has to acquire those firms too in principle.
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| HDC Holdings headquarters in Gangnam-gu, Seoul / Yonhap |
Casting a problem is Air Busan, a low-cost carrier (LCC) in which Asiana Airlines has a 44.2 percent stake.
The country's Fair Trade Act obliges a granddaughter company of a group's holding firm to either possess a 100 percent stake in its subsidiaries or sell off the subsidiary within two years.
If HDC acquires Asiana Airlines and places it into HDC Group's current shareholding structure, Asiana Airlines will be a "granddaughter company" of HDC Holdings, and Air Busan will be subject to the aforementioned fair trade rule. This obliges HDC to either purchase the remaining 56 percent stake in Air Busan or give up on acquiring the LCC.
"Since we have two years to think about LCCs, we will make a strategic decision in the future," Chung said.
