HDC Uncomfortable with Recapitalization

Asiana Airlines president Han Chang-soo speaks at the company’s shareholder meeting on June 15.

Asiana Airlines is planning to increase its capital before support from creditors in order to improve its financial structure. According to industry experts, the airline’s recapitalization is likely to result in the creditors’ more influence and HDC Hyundai Development Company’s more difficulties in their takeover negotiations.

Asiana Airlines held an extraordinary shareholding meeting on June 15 and decided to change its articles of association to increase its convertible bond issuance limit and the number of issued stocks. Specifically, those will be adjusted from 700 billion won to 1.6 trillion won and from 800 million shares to 1.3 billion shares, respectively.

The recapitalization is to improve its financial structure deteriorated by COVID-19. Korea Development Bank and the Export-Import Bank of Korea decided to provide 1.3 trillion won and 1.7 trillion won last year and in April this year, respectively.

HDC Hyundai Development Co. is not comfortable with the recapitalization. “Asiana Airlines decided to borrow more money and carried out follow-up procedures regardless of our explicit disapproval,” HDC said on June 9. This is because the recapitalization can lead to more influence on the creditors’ part and its takeover can be made more difficult.

In the meantime, Korean Air and Asiana Airlines are planning to resume some international flights next month. For example, Korean Air’s flights to Dallas, Vienna, Hanoi and Ho Chi Minh are scheduled to resume or expand next month. Expansion is also scheduled for flights to LA, San Francisco, Paris and London.

Asiana Airlines is preparing to resume its flights to London (twice a week), Paris (once) and Istanbul (once). In addition, it is going to increase its flights to Hong Kong, Ho Chi Minh, Hanoi, Bangkok, San Francisco, LA and Frankfurt by once or twice a week. “The two airlines’ move is to maintain their services in advance and take more cargo transport into account,” said an industry insider, adding, “Still, any full restoration is still distant with COVID-19 not going away.”

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