Chairman Lee Dong-geol of Korea Development Bank Finds Sale of Asiana Airlines and Its Subsidiaries Desirable

Apr 17, 2019

Chairman Lee Dong-geol of KDB (Korea Development Bank), which is the main creditor bank of Kumho Asiana Group that is looking to sell Asiana Airlines, stated that ‘disposal by a sale en bloc’ is a good idea.
Regarding some predictions that believe that amount of acquisition will surpass $6.15 billion (7 trillion KRW) as amount of debts alone is $6.15 billion at the most, he stated that it is not true.
Creditors including KDB are going to decide on definite amount of financial support and method of financial support before the 25th. They are going to sign a MOU with Asiana Airlines again regarding financial structure improvement while Kumho Asiana Group will start public sale of Asiana Airlines.
“Kumho Asiana Group took a first step that will normalize Asiana Airlines and increase corporate value of Asiana Airlines.” said Chairman Lee regarding modified wording program that was submitted by Kumho on the 15th.
Kumho E&C, which is the major shareholder of Asiana Airlines, announced through the wording program that it would sell Air Busan and Air Seoul along with Asiana Airlines.
“It is likely that these subsidiaries were made to create synergy for Asiana Airlines.” said Chairman Lee. “It is desirable to sell them all together if possible.”
“Amount of debts of Asiana Airlines is not $6.15 billion, but it is around $3.17 billion (3.6 trillion KRW).” said Chairman Lee regarding predictions made by markets that believe that amount of debts alone is around $6.15 billion at the most.
This remark was made after considering some predictions that believe that price for sale of Asiana Airlines can be astronomical due to amount of debts Asiana Airlines has.
“One does not have to pay all debts when acquiring a business. If it raises appropriate amount of capital, it just carries on remaining debts with it.” said Chairman Lee. He is explaining that capital increase that corresponds to very small amount of entire debts is needed and that such capital increase will be the amount needed to acquire Asiana Airlines.

Chairman Lee Dong-geol of Korea Development Bank Finds Sale of Asiana Airlines and Its Subsidiaries Desirable

He also emphasized the fact that amount of financial burden will be lowered for a buyer as capital increase will be added to sales of old stocks. Creditors are looking to sell old stocks of Kumho E&C (33.47%, 68,688,063 stocks) to a third major corporation group and acquire new stocks at the same time.
“When management rights of former Chairman Park Sam-gu of Kumho Asiana Group were being sold, we combined selling process with a method of acquiring new stocks.” said Chairman Lee. “Because new stocks will not leak out and are going to be used for normalization, acquisition process of Asiana Airlines will be much more appealing.”
“Asiana Airlines will be in the black once it adjusts unpopular lines and supplements areas that will increase its profitability.” said Chairman Lee.
He himself is working to increase degree of appeal of Asiana Airlines due to rumors that say that Hanwha and SK Group are being reluctant to acquire Asiana Airlines.
Creditors are going to decide on visual plan for financial support until the 25th. 25th is the expiration date of Asiana Airline’s corporate bonds that are worth $52.7 million (60 billion KRW). If these corporate bonds are not paid back, Asiana Airlines needs to pay back ABS (Asset Backed Securities) worth $879 million (1 trillion KRW).
“We are going to come up with visual measures until the 25th to resolve liquidity issue.” said Chairman Lee.
Meanwhile, creditors are going to sign a MOU for financial structure sometime at the end of this month or early next month. Through this MOU, they are going to finalize conditions for capital support such as drag-along and prepare measures that will prevent influence of former Chairman Park Sam-gu.
When asked whether former Chairman Park may be involved in management again, Chairman Lee said that there is no way for former Chairman Park to be involved again.
Staff Reporter Ham, Jihyun | goham@etnews.com

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