Bidding for KAI to get underway in November

Korea Aerospace Industries’ T-50 jets assembly line in Sacheon, South Gyeongsang. By Byun Sun-goo

Korean Air Lines and Hyundai Heavy Industries are qualified to submit formal bids for a stake in Korea Aerospace Industries (KAI), Korea’s sole aircraft manufacturer, a state-lender said yesterday.

Korean Air and Hyundai Heavy Industries are scheduled to begin preliminary due diligence as early as next week before making binding bids for a 41.75 percent stake in KAI, worth 1.1 trillion won ($1 billion), in mid-November, said an official of the Korea Finance Corporation (KoFC).

Korean Air, Korea’s top air carrier, is an affiliate of Korea’s 10th-biggest conglomerate, Hanjin Group, and Hyundai Heavy Industries is the world’s largest shipbuilder.

KoFC, which is in charge of the sale as the biggest shareholder of KAI with a 26.41 percent interest, said it and other major shareholders plan to select a preferred bidder in mid-November and sign a final deal, the official said.

He said the preferred bidder will also conduct another round of due diligence meant to adjust prices for the stake in KAI.

He asked not to be identified, citing the ongoing process.

KoFC plans to retain a 15 percent hold on KAI while Hyundai Motor precision machinery maker Samsung Techwin and Doosan Group plan to offload 10 percent stakes each.

Korean Air fell 0.72 percent to 47,950 won and Hyundai Heavy Industries shed 0.2 percent to 252,500 won on the Seoul bourse.

The first preliminary bid fell through last month due to a lack of competition. Yonhap