Creditors to Provide Fresh Loan of 500 Bil. Won
Kumho Asiana Group has decided to sell off Asiana Airlines.
The group said on April 15 that the board of Kumho Engineering and Construction Co. has decided to sell off its stake in Asiana Airlines.
Kumho Engineering and Construction is a major shareholder of Asiana Airlines with a 33.47 percent stake. The construction company is, in turn, an affiliate of Kumho Buslines Co., whose largest shareholder is former group chairman Park Sam-koo.
If Kumho Engineering and Construction’s board decides to sell Asiana Airlines, the company will begin the process of selling its stake in the cash-strapped airline.
Then, Kumho Asiana Group will be able to receive a fresh loan of 500 billion won from its creditors, including Korea Development Bank.
The group will then be able to resolve the liquidity crisis at Asiana Airlines and ease financial problems at Kumho Engineering and Construction and Kumho Buslines.
On April 10, Kumho Asiana demanded 500 billion won in loan from its creditors on condition that former chairman Park Sam-koo step down permanently, Park's family offer his stake in Kumho Buslines as collateral for the loan, and the sale of the group’s assets.
The creditors, however, rejected Kumho Asiana's plan the following day, saying it was not enough to regain market trust.
Choi Jong-ku, chairman of the Financial Services Commission, also stressed that the owner family should step aside from Kumho Asiana, saying, "Park is stepping down and his son is going to manage Asiana Airlines, but what is the difference between them?"
Against this backdrop, industry watchers forecast that Kumho Asiana would have no other option but to sell off Asiana Airlines.
Kumho Asiana has to raise 1.3 trillion won on its own this year, which goes beyond its reach.
Over the weekend, creditors and Kumho Asiana were already reported to have exchanged views on the sale of Asiana Airlines and the size of the loan that the group will receive in return. Creditors are also expected to carry out a debt-for-equity swap for the group.
If Asiana Airlines is put up for sale, SK Group, Hanwha Group, CJ Group and Aekyung Group are expected to jump into the takeover race.
Business sources predict that SK Group, which has ample liquidity and can generate synergy between its affiliates and Asiana Airlines, is likely to take over the airline.
Already, some predict that CS Securities will be the lead manager for the sale and Earnst & Young Hanyoung Accounting Corp. will take charge of the due diligence.
If Asiana Airlines is sold, Kumho Asiana Group will have only Kumho Engineering & Construction, Kumho Buslines and Kumho Resort Co.
If Asiana Airlines, which accounts for more than 60 percent of the group's sales, is sold off, Kumho Asiana Group is expected to be reduced to the level of a mid-sized group.