Some potential buyers of Kumho Resort, the leisure arm of cash-strapped conglomerate Kumho Asiana Group, are already losing their appetite for the deal as the preliminary round of bidding looms, with the poor quality of its condominium assets cited as one concern.

About 10 potential buyers that submitted letters of intent to acquire Kumho Resort, including Kumho Petro Chemical and Daemyung Sono Group, are conducting preliminary due diligence in a virtual data room, industry sources said on Tuesday (December 1).

Fierce competition is expected as multiple strategic and financial investors are studying the target, but mixed opinions have merged on the attractiveness of the company.

“Most of the potential buyers are interested in Kumho Resort’s Asiana Country Club golf course, located in Gyeonggi Province, near Seoul, which is likely to generate strong profits,” said an industry source.

“On the other hand, views on the condominium business are not positive as condominiums (in the resort) are so old that a large-scale renovation is needed and it may not generate steady revenue due to the Covid-19 pandemic.”

Kumho Resort consists of four condominiums, three waterparks, Asiana CC and Weihai Point Hotel & Golf Resort.

Among the bidders that have already decided to pull out is Hoban Construction, which had been considered a strong candidate after actively purchasing resorts and golf courses recently. The construction company bought Resom Resort for 250 billion won ($229 million) in 2018, followed by golf course H1 Club and Seo Seoul Country Club.

Some market insiders said Hoban Construction recently put its 36-hole golf course Sky Valley CC up for sale to secure money to make more mergers and acquisitions. It had intended to join the race for Kumho Resort, but abruptly pulled out, an industry source said.

KT also took early steps to take part in the bidding by hiring EY Han Young as its advisor, but it seemingly has decided not to join the race.

The preliminary round of bidding is likely to be held on December 9. An auction process is being led by NH Investment & Securities and Deloitte Anjin. (Reporting by Byung-yoon Kim)