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HDC wins all overseas regulatory approvals for Asiana takeover

All News 13:52 July 03, 2020

SEOUL, July 3 (Yonhap) -- HDC Hyundai Development Co. said Friday it has received all overseas regulatory approvals for its takeover of Asiana Airlines Inc. and is in talks with the airline's creditors for renegotiations over acquisition terms.

Regulators in the United States, China, Kazakhstan, Uzbekistan, Turkey, Russia and South Korea already approved HDC's planned takeover of Asiana Airlines. On Thursday, Russia was the final country to approve the integration of the Asiana takeover, the company said in a statement.

"We are in talks with Asiana's creditors and related parties to review the current market conditions and renegotiate acquisition terms," an HDC spokesman said over the phone.

HDC's company logo and Asiana Airlines' planes at a airport in South Korea (Yonhap)

In December, the HDC-Mirae Asset Daewoo consortium signed the deal to acquire a 30.77 percent stake in Asiana from Kumho Industrial Co., a construction unit of Kumho Asiana Group, as well as new Asiana shares to be issued and Asiana's six affiliates, for 2.5 trillion won (US$2.2 billion), with a plan to complete the acquisition by June 27.

But the HDC-led consortium didn't push ahead with the proposed deal amid the COVID-19 pandemic and differences over terms of the deal.

HDC called for renegotiations with Asiana creditors over the acquisition terms, describing the ongoing virus crisis as a "never expected and very negative factor" that will affect its planned acquisition of Asiana Airlines.

HDC also cited snowballing debts of the airline as another reason for renegotiations, noting that debts are "damaging the acquisition value of the carrier."

Asiana's debts jumped by 4.5 trillion won from July last year to March this year, and its debt-to-equity ratio skyrocketed by 16,126 percent during the same period.

HDC and Kumho Asiana Group are required to wrap up the deal by Dec. 27.

Asiana has suspended most of its flights on international routes as more than 180 countries have strengthened entry restrictions amid virus fears this year.

As a result, its net losses for the January-March quarter deepened to 683.26 billion won from 89.18 billion won a year earlier.

To help Asiana stay afloat, the country's two state banks -- the KDB and the Export-Import Bank of Korea -- plan to inject a combined 1.7 trillion won into Asiana. Last year, the two banks extended a total of 1.6 trillion won to the cash-strapped carrier.

In its latest self-help plans, Asiana has had all of its 10,500 employees take unpaid leave for 15 days a month since April until business circumstances normalize. Asiana's executives have also agreed to forgo 60 percent of their wages, though no specific time frame was given for how long the pay cuts will remain in effect.

kyongae.choi@yna.co.kr
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