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Korea’s Hyundai and a partner are Asiana’s new investors
November 15th 2019
Airline’s majority investor, Kumho Industrial, selling 31% holding. Read More »
Asiana Airlines is entering a new era as cash poor shareholder and manager, Kumho, exits and a Hyundai Development and Mirae Asset Daewoo joint offer is chosen as the preferred bidder for a 31% share of the carrier.
Earlier this year, Korea Development Bank required Kumho to sell its 31% holding in Asiana as a condition for receiving a loan from the bank.
Kumho announced the winner. The deal will be completed in 2020. Terms were not disclosed, but media reported this week that the winning bid of approximately KRW2.5 trillion (US$2.2 billion) exceeded by KRW1 trillion a bid from Aekyung Group, the majority shareholder in LCC, Jeju Air.
Both bidders were said to value Kumho’s holding at KRW400 billion, leaving the remainder of the bid amount for new capital.
The strong balance sheet of the new investors will reduce Asiana’s debt. The carrier has saddled itself with a cycle of debt and accumulating interest payments and therefore has struggled to invest in its business from aircraft to product.
There were anti-competitive and financial concerns about the bid from Aekyung Group, which is a relatively small company. It could have been stretched by investing in Asiana.
It also was unclear whether Aekyung could successfully transition from managing low-cost Jeju to running Asiana. Some investors were positive about the outcome because it meant the LCC and Aekyung would not be encumbered by Asiana.
