The Kumho Asiana Group is seeking to raise money through aggressive initial public offerings (IPOs) of its affiliates. The group is desperate to improve the financial structure of Asiana Airlines Inc., its cash cow.
Asiana Airlines announced on Dec. 4 that it raised 457 billion won (US$413.01 million) of funds as of the end of November to pay back its loans for this year, including 417 billion won (US$376.86 million) raised by issuing asset-backed securities and 23.1 billion won (US$20.88 million) from the sales of the old shares following the IPO of its information and communication technology affiliate, Asiana IDT Inc.
The amount of Asiana Airlines’ debts to come due at the end of the year totaled 2.1 trillion won (US$1.9 billion). Out of it, the company paid back 1.8 trillion won (US$1.63 billion) through the sale of parent Kumho Asiana Group's headquarter building and a stake in affiliate CJ Logistics Corp., and the issuance of convertible bonds and asset-backed securities. Accordingly, the amount of Asiana Airlines’ loans came to 3.35 trillion won (US$3.03 billion) as of the end of November, down 706 billion won (US$638.05 million) from 4.06 trillion won (US$3.67 billion) at the end of last year. The amount of cash reserves stood at 300 billion won (US$271.13 million) over the same period.
Kumho Asiana Group is accelerating IPOs of affiliate companies to improve the group’s financial status. A case in point is Asiana IDT which has been listed on the benchmark KOSPI market on November 23. Due to lackluster demand, the company’s shares were priced at 15,000 won (US$13.56), well below the target range of 19,300 won to 24,100 won (US$17.44 to 21.78). The value of Asiana IDT was 166.5 billion won (US$150.47 million), only half of that when the company first pushed ahead with the IPO after all. Previously, SK Lubricants Co. and HDC I-Service Co., the affiliates of conglomerates, decided not to list their shares on the stock market when their book buildings failed to meet pricing expectations. Park made an opposite move and it shows his desperation for finance.
Kumho Asiana Group chairman Park Sam-koo also seems to be considering the IPO of its low-cost carrier Air Busan Co. in the future. Air Busan submitted a securities report to the Financial Supervisory Service on November 22 in order to list its shares on the KOSPI market within this year. The target range is 3,600 won to 4,000 won (US$3.25 to 3.62) per share. The company plans to hold a book building session for two days from December 13 to 14 and set the price for the offering. It will receive subscriptions from December 18 to 19.