HDC Hyundai Development Company, Reasons Behind the Postponement of Asiana Airlines M&A Closing

[Asia Economy Reporter Yoo In-ho] HDC Hyundai Development Company has indefinitely postponed the merger and acquisition (M&A) process of Asiana Airlines.

HDC Hyundai Development Company deleted and changed the scheduled date for acquiring Asiana Airlines' shares, which was set for the 30th of last month, through a public disclosure.

Since being selected as the preferred bidder for Asiana Airlines at the end of last year, HDC Hyundai Development Company planned to complete the share acquisition by April 30 of this year.

However, due to the severe management difficulties faced by the airline industry amid the COVID-19 pandemic, the Asiana Airlines M&A process has encountered a red light.

Following the postponement of the planned paid-in capital increase for Asiana Airlines earlier last month, HDC Hyundai Development Company also halted its plan to issue corporate bonds scheduled for the latter part of the month.

HDC Hyundai Development Company intended to participate in Asiana Airlines' paid-in capital increase and use the funds to repay approximately 1.17 trillion KRW in loans from KDB Industrial Bank and the Export-Import Bank of Korea.

However, this does not mean that HDC Hyundai Development Company is stopping or abandoning the Asiana Airlines M&A. In the disclosure, HDC Hyundai Development Company did not specify a separate date for share acquisition; for existing shares (those held by Kumho Industrial), the acquisition date was changed to either 10 days after all the closing conditions stipulated in Article 5 of the existing share purchase agreement are met or a date mutually agreed upon by the parties as the closing date.

For new shares, the acquisition date was set as the day after 10 days have passed since all closing conditions stipulated in Article 4 of the new share subscription agreement are met, or the day after a separately agreed closing date by the parties.

This means that the contract will be completed once all the preceding conditions, including the paid-in capital increase, are fulfilled without specifying a particular date for the share acquisition. Among the preceding conditions, the corporate merger notifications for six overseas countries have received approvals from five countries, including the United States and China, with only Russia remaining.

The issue now lies with whether the main creditor banks, KDB Industrial Bank and the Export-Import Bank of Korea, will provide additional support. Industry insiders believe that HDC Hyundai Development Company has likely requested extensions on loan repayments and interest rate reductions from these main creditor banks. Previously, KDB Industrial Bank and the Export-Import Bank of Korea decided to provide 1.7 trillion KRW in new funds to Asiana Airlines, which was severely impacted by the COVID-19 crisis.

This content was produced with the assistance of AI translation services.