HDC, Kumho still sparring over breakthrough in stalled Asiana deal

SEOUL, Aug. 12 (Yonhap) -- HDC Hyundai Development Co. and Kumho Industrial Co. are still divided over a meeting to find a breakthrough in the stalled deal over Asiana Airlines Inc., industry sources said Wednesday.

The HDC-led consortium signed the deal in December to acquire a 30.77 percent stake in Asiana from Kumho Industrial, 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).

The consortium was originally planning to complete the acquisition by June 27. But the pandemic emerged as a major stumbling block to the deal.

HDC and Kumho Industrial recently agreed on the top-level meeting to push forward the deal following months of disputes over acquisition terms that HDC argues have changed dramatically due to the new coronavirus outbreak early this year.

The two companies said they are "in talks to proceed with the meeting," but they appear to have difficulties in narrowing the gap running deep over the purpose and logistics of the meeting.

HDC wants a second round of due diligence on Asiana Airlines to figure out the carrier's current financial status amid the COVID-19 pandemic. But Kumho Industrial wants the meeting to be focused on completing the deal, according to the companies.

"We want working-level officials (of the two companies) to meet and discuss the agenda (for the CEOs' meeting) first and then have the CEOs meet for a resolution," a Kumho official said over the phone.

Concerns over the possible rupture of the deal grew bigger in June when HDC called for renegotiations with Kumho and Asiana creditors over the acquisition terms, describing the virus crisis as a "never expected and very negative factor" that will affect its planned acquisition of Asiana.

HDC demanded renegotiations through written documents, but the main creditor Korea Development Bank (KDB) asked the company to hold face-to-face talks.

Back then, HDC cited snowballing debts of the airline as another reason for renegotiations.

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 also asked for another round of due diligence for 12 weeks from mid-August on the debt-ridden carrier, which was balked at by Kumho and the KDB.

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

From January to June, its net losses deepened to 432.88 billion won from 267.4 billion won in the same period of last year.

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 two state lenders extended a total of 1.6 trillion won to the carrier.

kyongae.choi@yna.co.kr
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