Final bids for Asiana Airlines set for Nov. 7

By Choi Kyong-ae

SEOUL, Oct. 18 (Yonhap) -- Kumho Asiana Group will receive final bids early next month in an auction to sell its airline unit as part of its broad restructuring moves, industry sources said Friday.

The Korean airline-to-petrochemical conglomerate put a controlling 31 percent stake in Asiana Airlines Inc. up for sale to secure cash needed to pay off debt and secure operating capital.

"The deal's lead manager Credit Suisse sent a letter to four initial bidders on Thursday, asking them to submit a final bid on Nov. 7," a person with direct knowledge of the matter told Yonhap News Agency.

The four initial bidders are cosmetics-to-airline conglomerate Aekyung Group, a consortium formed by Hyundai Development Co. (HDC) and Mirae Asset Daewoo, another consortium led by the local activist fund Korea Corporate Governance Improvement (KCGI) and a Stone Bridge Capital-led consortium. They made it to the shortlist in a preliminary auction last month.

When contacted by Yonhap, Aekyung said it "will join the final bid and is considering forming a consortium with Stone Bridge Capital." Stone Bridge also confirmed they are in talks over joining hands to acquire Asiana Airlines.

HDC said its consortium with Mirae Asset Daewoo is giving a "serious consideration" to participate in the final auction.

KCGI, a homegrown equity fund, could not be reached for comment.

Among the bidders, Aekyung has been the most aggressive, stressing it is the only strategic investor that has 13 years of experience and know-how in operating an airline.

AK Holdings, the holding firm of Aekyung Group, owns a 56.9 percent stake in Jeju Air Co., the nation's largest low-cost carrier by sales.

Kumho Asiana, the parent of Asiana Airlines, aims to sell the 31 percent stake in the airline held by its subsidiary, Kumho Industrial Co., together with its six affiliates as part of its broad restructuring efforts.

The six affiliates include two budget carriers -- Air Seoul Inc., which is wholly owned by Asiana Airlines, and Air Busan Co., which is 46 percent owned by the airline.

The 31 percent stake was valued at 366 billion won (US$310 million) at Thursday's closing price of 5,330 won. But analysts estimate the deal could fetch up to 2 trillion won when management premiums and the value of new shares to be issued are taken into account.

Kumho Asiana aims to complete the sale of the airline unit within this year.

In 2018, Asiana Airlines and its main creditor, the state-run Korea Development Bank, signed a deal that required the carrier to secure liquidity through sales of assets and other means.

In the January-June period, the airline's net losses widened to 292 billion won from 43 billion won a year earlier due to the won's weakness against the dollar. A weak won drives up not only the value of dollar-denominated debts when converted into the local currency but also increases purchasing costs.

It owed financial institutions a total of 2.7 trillion won as of the end of June, with 500 billion won of loans maturing by the end of December.

kyongae.choi@yna.co.kr
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