Kumho Asiana Group has decided to dispose of its controlling stake in its flagship Asiana Airlines to avert a liquidity crisis facing Korea’s second-largest carrier, the group said.
SK, Hanwha, CJ and several other conglomerates have been mentioned as potential buyers for Asiana, which has been struggling under mounting debt amid rising costs and intensifying competition, according to industry analysts.
The group decided to sell off its flagship unit of Asiana Airlines through the board of directors’ meeting of Kumho Industrial, the largest shareholder of the air carrier that owned a 33.47 per cent stake, local media reported.
The stake was valued at about 300 billion won (S$358 million).
“The decision was made for the sake of more than 10,000 Asiana Airlines employees,” the group said in a statement. “We decided selling Asiana Airlines would be a way for the group and the carrier to regain market trust.”
The group’s main creditor, the Korea Development Bank (KDB), said former Chairman Park had a meeting with KDB Chairman Lee Dong-gull and asked for a 500 billion won loan from the state-run lender in return for selling the carrier.
In the plan, the stake will be available immediately either through selling existing shares or issuing new rights to the buyer. Also, the carrier’s subsidiaries, such as Air Busan, Asiana IDT and others, will be sold together as a package.
The decision to sell comes amid a group liquidity shortage while its debts are snowballing. At the end of last year, the company’s total liability stood at 3.44 trillion won, 1.32 trillion won of which has to be paid by the end of the year.
The most urgent debt is 60 billion won in bonds that are due April 25. If the firm fails to repay the amount, its credit rating will drop to junk level, which will trigger creditors to call in loans worth nearly 1 trillion won before their maturity.
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