Sale of Asiana Airlines stake officially starts

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Sale of Asiana Airlines stake officially starts

Kumho Industrial on Thursday issued public notice to sell its 31-percent stake in Asiana Airlines.

Credit Suisse, which is managing the deal, said it will deliver the investment prospectus to potential buyers.

The preliminary bidding process is expected to run through September. Shortlisted investors will participate in the main bidding around November. If the process goes as planned, the sales process could be completed this year.

Major conglomerates, including SK, Hanwha, GS, CJ and Aekyung, are reported to be interested in acquiring the stake in the country’s second-largest full-service carrier, yet none of them have openly expressed their intention except for Aekyung, which owns approximately 57 percent of Jeju Air, Korea’s largest low-cost carrier.

It is likely the list of interested bidders will be firmed up when they reach out to accounting firms and submit letters of intent.

While acquiring the stake in Asiana Airlines would give conglomerates relatively easy access to the aviation business, which has high barrier to entry, the debt and recent struggles of Asiana Airlines are cited as major obstacles for investors.

In the first quarter this year, Asiana Airlines swung to a net loss of 89.2 billion won ($75.5 million), from 3.5 billion won net profit in the previous year.

Its debt ratio in the first quarter hit 895 percent. The airline blames the losses in part on the ongoing trade war between the United States and China, as well as the global economic slowdown.

Creditors of Asiana Airlines, including the Korea Development Bank, are hoping to sell Asiana along with related companies, Air Seoul and Air Busan, yet there is still a chance of them being sold separately depending on the request of bidders.

The share price of Asiana Airlines fell 5.98 percent Thursday to 6,130 won.

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