Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
HDC, Kumho make slow progress in Asiana takeover
Asiana Airlines' carrier figures at the company's headquarters in Seoul / Korea Times file
By Kwak Yeon-soo
By Kwak Yeon-soo
Hyundai Development Company (HDC) has failed to narrow differences in negotiations with Kumho Industrial to take over debt-ridden Asiana Airlines, postponing the signing of an agreement to purchase a controlling stake in the country's second largest carrier until the end of the month, according to industry officials Thursday.
Kumho Industrial, which owns a 31 percent stake in Asiana Airlines, selected the HDC-Mirae Asset Daewoo consortium as the preferred bidder Nov. 12, allowing the consortium to exclusively negotiate with the seller over the terms for a 30-day period by Dec. 12.
But an HDC official said the company was unable to sign a share purchase agreement (SPA) by the deadline, declining to comment on persisting disparities.
“Though we failed to sign an SPA, we are still in talks with Kumho Industrial to reach an agreement,” a HDC official said. “We cannot confirm by when we will reach an agreement unless some issues are resolved.”
Industry officials said the two companies could have failed to reach an agreement due to different opinions on the pricing of existing Asiana shares and possible contingent liabilities.
Concerns over possible contingent liabilities have been caused by Asiana Airlines' “inflight-meal chaos.”
Last year, Asiana terminated a 15-year-old deal with LSG Sky Chefs, a subsidiary of German airline Lufthansa, and inked a contract with GGK, a jointly set up in-flight catering service company with China's HNA Group.
However, the Fair Trade Commission said that the contract violated the fair trade rule and filed a former complaint with the prosecution, leaving HDC on the edge to pay the fine.
HDC also faces mounting tasks, including how to address the carrier's debt amounting to 9.6 trillion won ($8 billion) and how to deal with a number of subsidiaries Asiana Airlines possesses.
Kumho Industrial said the two counterparts will continue with talks on signing a sales and purchase agreement, without elaborating on the exact date.
Last month, the HDC-Mirae consortium beat two consortia led by airline-to-cosmetics conglomerate Aekyung Group and homegrown private equity fund Korea Corporate Governance Improvement (KCGI), respectively, in the auction for the carrier.
The HDC consortium submitted an overall acquisition price of 2.5 trillion won for the 31 percent stake, as well as new shares to be issued and the airline's six affiliates, which include low-cost carriers Air Busan and Air Seoul.