A deal to acquire South Korean carrier Asiana Airlines has collapsed. News of the deal’s failure came on Friday, and it means that the airline won’t be taken over by Hyundai Development Company and Mirae Asset Daewoo. Reports indicate that the airline’s owner, Kumho Industrial, pulled the ₩2.5 trillion ($2.1 billion) sale.
A call for better terms
The deal for the Hyundai Development Company (HDC) consortium to purchase Asiana from Kumho Industrial began in December 2019, before the current global crisis emerged. The airline was already experiencing financial difficulties at the time and had been looking to cut costs in the months leading up to the deal.
As with nearly everything else in the airline industry, the onset of the global health crisis changed the dynamic of the deal as the carrier found itself in an even worse position than it was already in.
According to Asia Times, HDC had been looking to conduct additional rounds of due diligence on the airline. This was widely seen as an attempt to force a price cut and a call for better terms. The airline’s debt has surged, and much of its revenue has dried up since March.
Deal called off, fresh funding delivered
“Kumho Industrial has notified HDC of the deal termination,” Choi Dae-hyun, vice-president of Asiana’s main creditor Korea Development Bank, announced Friday as per reporting by Asia Times.
Instead of the purchase, Korea Development Bank, as well as another state-owned lender- the Export-Import Bank of Korea, will inject another ₩2.4 trillion ($2.02 billion) into the carrier to help keep it flying Choi adds.
The two lending banks are expected to become Asiana’s most significant shareholders. They are also likely to seek a restructuring of the airline before attempts are made to find a new owner.
According to Reuters, a regulatory filing indicates that HDC is planning to respond after a legal review, adding that the deal fell apart as a result of Asiana’s failure to meet preconditions. Meanwhile, the other part of the acquisition consortium, Mirae Asset, will reportedly respond according to future progress as a financial investor.
It’s noted by Asia Times that the troubled South Korean carrier has already received state cash injections totaling ₩3.3 trillion ($2.78 billion) since the beginning of last 2019.
About Asiana Airlines
Star Alliance member Asiana Airlines is South Korea’s second-largest carrier, next to SkyTeam alliance member Korean Air.
Data from Planespotters.net indicates that the airline has a fleet of 82 aircraft. Including six Airbus A380s, some of which the carrier has decided to keep active during the crisis. The airline has also chosen to retain the Boeing 747 as part of its long-haul fleet, which also includes the Boeing 777, Airbus A350, and A330.
Simple Flying contacted Hyundai Development Company looking for a statement on the matter. At the time of publication, no response was received from the company.
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