Asiana’s creditors who could not find their owner … ‘in the middle of the concubine’ until normalization

Upon completion of the acquisition of Asiana Airlines by HDC Hyundai Development Company, Asiana Airlines enters the creditor management system. The government plans to resell it after implementing a plan to normalize management, starting with the investment of a key 2.4 trillion won industry stabilization fund to Asiana Airlines. It has decided to provide emergency liquidity to Kumho Express, which is suffering the aftermath of the new coronavirus infection (Corona 19). Creditors such as the Korean Development Bank held an online briefing on the 11th and officially declared that the sale of Asiana Airlines would be canceled. It has been approximately nine months since Kumho Industrial and HDC Hyun-san signed a stock sale agreement with Asiana Airlines in December last year.

Creditors decided to support Asiana Airlines with a fund draft worth 2.4 trillion won in ‘Plan B’. In the event that Asiana Airlines’ credit rating is downgraded due to the loss of the sale, the amount required for market stabilization is 2.1 trillion won and 300 billion won in liquidity shortfall, which is a concession. for the payment of financial debts that they are obliged to pay. The support method is KRW 1,920 billion in working capital loans and KRW 480,000 million in the acquisition of permanently convertible bonds (CB). Creditors predicted that if the company’s credit rating was maintained with the support of the draft fund, the size of the loan would decline further.

In addition, he plans to carry out restructuring such as route adjustment, cost reduction and reorganization through management consulting. It also decided to review plans for the separate sale of subsidiaries such as Air Busan and Air Seoul. The restructuring of the workforce and the reduction of the main shareholders are not issues to consider at this stage, he drew a line.

The creditors decided to provide 120 billion won to Kumho Express, which is suffering from the Corona 19 crisis.

Sang-eun Choi, Vice President of Saneun, said: “Hyunsan was willing to participate in mergers and acquisitions (M&A), but after the Corona 19 incident, there were lamentations such as consultations in the process of proceeding with the deal.” ) I’m thinking.”

It seems that the package ‘Restructuring, potato, debt relief’ is promoted

Creditors plan to focus on normalizing the management of Asiana Airlines by first investing the draft fund, but the success or failure of the new coronavirus infection (Corona 19) is prolonged. A financial sector official said: “Asiana Airlines managed to generate profits in the second and fourth quarters by focusing on the cargo sector, but if Corona 19 is prolonged, additional support may be needed.”

Creditors are dominant in the view that they will proceed with a “restructuring + downsizing + debt cancellation” package. As of the second quarter of this year, Asiana Airlines’ debt-to-equity ratio was 2,291.3% and the equity erosion rate was 49.8%, more than at the end of last year (1,386.7%, 18.6%). An industry insider said: “After the funding of the draft fund, Kumho Industries and Asiana Airlines will have to make efforts to normalize management, such as workforce restructuring and asset reallocation,” and “is very likely to be implemented from the current management change. ”

This is a scenario in which the conversion of permanent bond shares of W800bn, the reduction of Kumho Industrial’s stake in Asiana Airlines (30.79%) and the sale of subsidiaries are expected. The Korea Development Bank and the Export-Import Bank are known to be considering converting their permanent bonds (worth 800 billion won) into shares, temporarily nationalizing Asiana Airlines, and then reselling them through trade normalization. When the permanent bond is converted into shares, the creditor becomes the largest shareholder (37% of the capital stock) of Asiana Airlines.

Regarding the sale of subsidiaries, Sang-Hyun Choi, Vice President of the Corporate Finance Division, said: “We will also consider the sale of subsidiaries when making inquiries.” However, even if subsidiaries like Air Seoul, Air Busan, Asiana IDT, Asiana Saver and Asiana Airport, which were included in the sale this time, are sold separately, the acquisition is unlikely to be successful, so a separate corporation was established to separate the subsidiaries. There is a possibility that the work of separating the profitable business unit and the unprofitable business unit will be carried out.

The possibility of restructuring the workforce starting next year is also discussed, even if it maintains employment. In this process, there is also the possibility of voluntary agreements or trainings. This is because a legal basis for restructuring is needed. However, creditors do not plan to adjust the labor share immediately, as Asiana Airlines has been promoting lower labor costs since the beginning of this year. Vice President Choi said, “Through self-help efforts such as employee rotating leave and paid leave, labor costs of 180 billion won will be reduced by the end of October,” he said. “As the draft fund is supported, it seems that the workforce is not urgent.”

The part that most worries creditors is whether they are deducted or not. Within creditors, a consensus has been reached to some extent on the need to reduce the stake in Asiana Airlines held by Kumho Industries, a major shareholder. However, it is known that the claim that the whole potato or 100 to 1 potato is necessary and that it is “excessive considering the handling conditions” faces. Kumho Industries is also protesting that the past restructuring cases and Asiana Airlines are different. It is unclear whether Kumho Petrochemical or general minority shareholders will be deducted, but the spread reduction is influential. Vice President Choi said: “The financial status of the company at the end of the year, the management status of creditors and obtaining a stake through permanent bond conversion is the key to deduct or not to deduct existing shareholders.” , said. “It is inappropriate to mention it at this stage.” The creditors plan to promote the resale of Asiana Airlines in the future when market conditions improve. /
/ Reporters Neung-Hyun Kim and Si-Jin Park [email protected]

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