Principals can't agree to meet on Asiana takeover

HDC Hyundai Development and Kumho Industrial are still divided over how to hold a meeting to find a breakthrough in a stalled deal over Asiana Airlines, industry sources said Wednesday.

The HDC-led consortium signed the deal in December to acquire a 30.77 percent stake in Asiana from Kumho Industrial, a construction unit of Kumho Asiana Group.

The consortium was originally planning to complete the acquisition by June 27. But the pandemic emerged as a major stumbling block to the deal.

HDC and Kumho Industrial recently agreed on a top-level meeting to push forward the deal following months of disputes over acquisition terms that HDC argues have changed dramatically due to the coronavirus outbreak.

The two companies said they are "in talks to proceed with the meeting," but they appear to be having difficulties in narrowing a gap over the purpose and logistics of the meeting.

HDC wants a second round of due diligence on Asiana Airlines to figure out the carrier's current financial status. But Kumho Industrial wants the meeting to be focused on completing the deal, according to the companies.

"We want working-level officials [of the two companies] to meet and discuss the agenda [for a CEOs' meeting] first and then have the CEOs meet for a resolution," a Kumho official said over the phone.

Concerns over a possible rupture of the deal grew bigger in June when HDC called for renegotiations with Kumho and Asiana creditors over the acquisition terms, describing the virus crisis as a "never expected and very negative factor" that affected its planned acquisition of Asiana.

HDC demanded renegotiations through written documents, but the main creditor Korea Development Bank (KDB) asked the company to hold face-to-face talks.

Back then, HDC cited the airline's snowballing debts as a reason for renegotiations.

Asiana's debts jumped by 4.5 trillion won ($3.8 billion) from July last year to March this year, and its debt-to-equity ratio skyrocketed by 16,126 percent during the same period.

HDC also asked for another round of due diligence for 12 weeks from mid-August on the carrier, which was balked at by Kumho and the KDB.

Asiana has suspended most flights on international routes as more than 180 countries have strengthened entry restrictions amid virus fears this year.

From January to June, its net losses deepened to 432.88 billion won from 267.4 billion won in the same period last year.

To help Asiana stay afloat, the KDB and the Export-Import Bank of Korea plan to inject a combined 1.7 trillion won into Asiana. Last year, the two state lenders extended a total of 1.6 trillion won to the carrier.

Yonhap