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Kumho Asiana likely to sell flagship unit in return for financial help

All Headlines 09:51 April 15, 2019

SEOUL, April 15 (Yonhap) -- Cash-strapped Kumho Asiana Group is expected to submit a set of fresh self-rescue measures soon, including selling off its flagship unit, in a desperate move to get additional financial help from its creditors, industry sources said Monday.

Kumho Asiana and its nine creditors, led by the state-run Korea Development Bank (KDB), are in negotiations to fine tune the self-rescue measures to address the airline-to-petrochemical conglomerate's worsening financial status and eventually help it back on track, they said.

"The group is expected to come up with additional self-help plans that include the sale of Asiana Airlines Inc. early this week," a person with direct knowledge of the matter said over the phone.

Kumho Asiana likely to sell flagship unit in return for financial help - 1

Last week, Kumho Asiana asked the KDB to provide an additional 500 billion won (US$440 million) in financial assistance and pledged to sell off Asiana Airlines if it fails to meet creditors' demands in three years.

But creditors and the Financial Services Commission (FSC), the country's financial regulator, balked at the proposal, which they said is insufficient to regain market trust.

On Thursday, FSC Chairman Choi Jong-ku called on Kumho Asiana's founding family to show sincerity in its appeal to revive flagship Asiana Airlines.

Creditors urged the group's founding family to sell their personal assets and submit a plan to raise funds through a rights issue.

Kumho Asiana Chairman Park Sam-koo stepped down last month as chief executive of Asiana Airlines after the company widened its losses by amending its financial reports.

Choi and creditors have also voiced opposition to the Park family's plan to keep its control over Asiana Airlines.

Last year, the KDB and Asiana Airlines signed a deal that required the carrier to secure liquidity through sales of noncore assets and the issuance of convertible and perpetual bonds.

Asiana Airlines owes financial institutions 3.2 trillion won, and it has to repay 1 trillion won of the total this year, according to the company.

Kumho Industrial Co. owns a 33.47 percent stake in Asiana Airlines, making it the largest shareholder, and Kumho Petrochemical Co. holds a 11.98 percent stake, with the remainder held by others. Creditors do not own a stake in the airline.

Asiana Airlines swung to a net loss of 10.4 billion won last year from the previous year's 248 billion-won net profit due to currency-related losses and increased jet fuel costs.

kyongae.choi@yna.co.kr
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