State-owned Korea Development Bank, the main creditor of Asiana Airlines (OZ, Seoul Incheon), has offered further financial incentives to ease the burden for Hyundai Development Co (HDC) to acquire the indebted airline and save the deal from collapse, sources close to the deal told the Korea Economic Daily.
On top of extending assistance worth KRW800 billion won (USD674 million) in the form of perpetual bonds, the bank is now reportedly considering offering further loans of KRW700 billion (USD590 million) to the preferred buyer.
This would help HDC reduce the size of a proposed rights offering from KRW2.2 trillion (USD1.85 billion) to KRW1.5 trillion (USD1.26 billion), which it had planned to lower Asiana’s debt ratio when it takes over the carrier.
HDC Chairman Chung Mong-gyu and KDB Chairman Lee Dong-gull met on August 26 to discuss the issue - their third such meeting in recent months.
HDC and brokerage Mirae Asset Daewoo agreed in December to buy a 30.77% stake in the airline for about KRW2.5 trillion (USD2.1 billion). The deal was supposed to be completed by June but has been delayed as the current crisis pushes Asiana further into debt. HDC has demanded more due diligence to ascertain the carrier’s true financial status, but creditors and Kumho Industrial object.
Korea Development Bank is now mulling opening a credit line with Hyundai for further financial assistance, the sources said, while another option is for the bank to exchange bonds for Asiana shares and sell them on the market - perhaps to HDC to help it consolidate its control over the airline.
“We discussed at great length ways to complete the deal with HDC. All options were put on the table at today’s meeting. We’re now awaiting a response from HDC,” the bank said in a statement.
On August 14, Asiana Airlines posted a KRW633.26 billion (USD534 million) net loss for the six months from January to June, down from a KRW291.62 billion (USD246 million) loss in the same period in 2019, the company said in a stock exchange filing.
