SEOUL, April 29 (Yonhap) — HDC Hyundai Development Co. said Wednesday its acquisition of Asiana Airlines Inc. will be finalized after May, as a foreign regulator has yet to approve their integration.
In December, the consortium set up by HDC Hyundai Development and Mirae Asset Daewoo signed a deal to acquire a 30.77 percent stake in Asiana from Kumho Asiana Group, as well as new shares to be issued and Asiana’s six affiliates, for 2.5 trillion won (US$2.2 billion).
To complete the overall process to acquire Asiana, it is essential to obtain approval from countries to which the airline offers services over the integration of the two Korean companies.’
Regulators in the United States, China, Kazakhstan, Uzbekistan, Turkey and South Korea have recently approved HDC’s planned takeover of Asiana.
“Russia is the only remaining country that is still reviewing the integration. Once Russia approves the deal, HDC will be able to enter into the process to take over Asiana next month,” an HDC official told Yonhap News Agency over the phone.
But he was not sure whether the takeover process will be completed within next month.
HDC had reiterated its plan to finish the process to acquire Asiana by the end of April, dismissing speculations that it may have difficulties in taking over the company due to the economic fallout from the coronavirus outbreak.
Asiana and other South Korean carriers have suspended most of their flights on international routes as an increasing number of countries have strengthened entry restrictions on incoming passengers amid virus fears.
To help Asiana stay afloat, the country’s two state lenders — the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank) plan to inject a combined 1.7 trillion won into Asiana amid the growing impact of COVID-19 on the airline sector.
The two policy lenders, which are also creditor banks of Asiana, have decided to extend new loans to Asiana to dispel growing concerns that creditor banks’ plan to sell the airline may fall through due to the virus impact, a KDB official said.
Last year, the KDB and Eximbank extended a total of 1.6 trillion won to the country’s second-biggest airline.
The HDC-Mirae Asset Daewoo consortium plans to invest a combined 2.18 trillion won in new shares to be issued by Asiana to help improve the airline’s financial status. It said it plans to cut costs by streamlining routes and enhancing cost effectiveness.
HDC expects the capital injection to help lower the airline’s debt-to-equity ratio to 300 percent from the current 660 percent.
After the acquisition, HDC is expected to own a 61.5 percent stake in Asiana following the planned rights issue, with Mirae Asset Daewoo set to have a 15 percent stake in the carrier.
Shares in Asiana plunged 22 percent this year through Tuesday, underperforming the broader KOSPI’s 12 percent loss.
In its latest self-help plans, Asiana said it had all of its 10,500 employees take unpaid leave for 15 days a month from April until business circumstances normalize. Asiana’s executives have also agreed to forgo 60 percent of their wages, though no specific time frame was given for how long the pay cuts will remain in effect.