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Creditors of Asiana Airlines mull counterproposal over due diligence

All News 16:13 August 02, 2020

SEOUL, Aug. 2 (Yonhap) -- Creditors of Asiana Airlines Inc. are considering making a counterproposal to sharply cut the period of another round of due diligence on the debt-laden carrier, an official of the creditors said Sunday.

The move came more than a week after HDC Hyundai Development Co., a major property developer, demanded additional due diligence on Asiana Airlines for 12 weeks beginning in mid-August.

HDC has claimed it will be forced to shoulder Asiana's heavy debts if it acquires the airline without looking into its current financial condition hit hard by the coronavirus pandemic.

HDC Hyundai Development Co.'s company logo (L), and Asiana Airlines planes at an airport in South Korea (Yonhap)

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

Asiana's net losses for the the January-March quarter deepened to 683 billion won (US$572 million) from 89.18 billion won a year earlier. It is widely expected to report widened losses for the second quarter.

Meanwhile, Kumho Industrial Co., which signed a deal with the HDC-led consortium in December to sell its entire 30.77 percent stake in Asiana, has demanded that HDC complete the deal by mid-August.

Kumho Industrial has expressed regrets about HDC's request, saying it has provided all required documents and financial information to the construction company since December.

It remains unclear how HDC will react if the creditors counter-propose to sharply cut additional due diligence on the carrier, the creditor official said.

The state-run Korea Development Bank (KDB), Asiana's main creditor bank, is set to announce its stance on the stalled Asiana deal later this week.

To help Asiana stay afloat, the KDB and the Export-Import Bank of Korea plan to inject a combined 1.7 trillion won into Asiana. Last year, the creditors extended a total of 1.6 trillion won to the carrier.

In its self-help measures, 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.


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