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Asiana bid likely to go to one of two consortia

Nov 06,2019
Two consortia led by cosmetics-to-airline conglomerate Aekyung Group and construction firm Hyundai Development (HDC) will be major competitors in the final auction for a stake in Asiana Airlines, industry sources said Tuesday.

A 31 percent stake in Asiana Airlines has been up for sale, and lead manager Credit Suisse will receive final bids from potential investors by 5 p.m. on Thursday.

In the initial auction held in September, Aekyung, the HDC-Mirae Asset Daewoo consortium, Korea Corporate Governance Improvement (KCGI) and Stone Bridge Capital made it onto the shortlist. Last month, Aekyung and Stone Bridge formed a consortium, and homegrown fund KCGI joined hands with the BankerStreet private equity fund.

The Aekyung-Stone Bridge consortium and the HDC-Mirae consortium “are likely to be main competitors” to acquire the 31 percent Asiana stake, certain new shares to be issued and the airline’s six affiliates in a packaged deal, an airline official told Yonhap over the phone.

It remains to be seen whether the KCGI-BankerStreet consortium will come up with a strategic investor such as SK Group or GS Group, he said.

When contacted by Yonhap, Aekyung and HDC said they will submit final bids on Thursday. KCGI didn’t say whether it would invite a corporate strategic investor or not.

Among the consortia, the Aekyung-led one has been the most aggressive, stressing it is the only strategic investor that has 13 years of experience and know-how in operating an airline.

AK Holdings, the holding firm of Aekyung Group, owns a 56.9 percent stake in Jeju Air, the nation’s largest low-cost carrier by sales.

“There is no precedent in which a company that does not have experience of operating an airline has succeeded in airline acquisition. As Aekyung has Jeju Air under its wing, its acquisition of Asiana Airlines is in line with global mergers and acquisitions trends,” Aekyung said.

On Tuesday, shares in Asiana Airlines remained unchanged at 5,790 won ($5.01), its affiliate Air Busan Co. rose 1.8 percent to 6,700 won, and Jeju Air jumped 3.3 percent to 25,150 won. The broader Kospi gained 0.6 percent.

Kumho Asiana Group, the parent of Asiana Airlines, aims to sell the stake in the airline held by its subsidiary, Kumho Industrial, together with its six affiliates as part of its broad restructuring efforts.

The six affiliates include two budget carriers - Air Seoul, which is wholly owned by Asiana Airlines, and Air Busan, which is 46 percent owned by the airline.

The 31 percent stake was valued at 360 billion won at Monday’s closing price of 5,790 won. But analysts estimate the deal could fetch up to 2 trillion won when the management premium and the value of new shares to be issued are taken into account.

Kumho Asiana aims to complete the sale of the airline unit this year.

In 2018, Asiana Airlines and its main creditor, the state-run Korea Development Bank, signed a deal that required the carrier to secure liquidity through sales of assets and other means.

In the January-June period, the airline’s net losses widened to 292 billion won from 43 billion won a year earlier due to the won’s weakness against the dollar.

Asiana Airlines owed financial institutions a total of 2.7 trillion won as of the end of June, with 500 billion won of loans due to mature by the end of December.

Asiana Airlines is scheduled to release its January-September earnings results on Nov. 14.

Yonhap


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