Asiana Creditors Renegotiate with Hysan... Painful Process Expected for Agreement

At Least 6-Month Extension of Acquisition Contract Termination Unavoidable

[Asia Economy Reporter Kangwook Cho] The creditors, including the Korea Development Bank, have expressed their intention to hear specific conditions regarding HDC Hyundai Development Company's request to reconsider the terms of its acquisition of Asiana Airlines from scratch. As the negotiation table between the two parties is being reassembled, it appears inevitable that the acquisition contract deadline, originally set for the 27th of this month, will be extended by at least six months.

According to financial sources on the 10th, the creditors plan to proceed with renegotiations with HDC Hyundai Development. In particular, the possibility of a breakdown in acquisition negotiations, which had been a concern, is being ruled out, and it is understood that both sides plan to narrow their differences through continuous negotiation processes.

A creditor official said, "Since HDC Hyundai Development has still expressed its intention to acquire and requested negotiations, there is no reason not to respond," adding, "It is still difficult to fully understand HDC Hyundai Development's intentions, so we need to meet soon to hear what specific conditions they want and examine the differences between the two sides."

As both sides agreed to reassemble the negotiation table, the acquisition contract deadline, originally scheduled for the 27th of this month, is expected to be extended to December 27th, six months later. Although the immediate collapse of the acquisition contract has been avoided, the additional negotiation process is expected to face considerable difficulties. This is because the creditors still maintain the position that it is difficult to lower the amount confirmed in the official bidding process.

During the renegotiations between the two sides, which will continue for six months until the end of this year, price adjustments, additional financial support, and conversion of perpetual bonds into equity are expected. In particular, HDC Hyundai Development may bring to the negotiation table the payment of 322.8 billion won to Kumho Industrial for the acquisition of old shares and the payment of 2.1772 trillion won for the acquisition of new shares. Considerable difficulties are anticipated during this process.

Some quarters are also mentioning the possibility of HDC Hyundai Development giving up on acquiring Asiana Airlines. There are rumors that Mirae Asset Daewoo, which formed a consortium with HDC Hyundai Development, has recently turned skeptical about acquiring Asiana Airlines. Given the unfavorable management conditions due to the spread of the novel coronavirus disease (COVID-19), it is difficult for financial investors (FIs) to pour funds.

In this case, there is also a possibility of litigation between the two sides over the repayment of the deposits of 32.2 billion won paid to Kumho Industrial and 217.7 billion won paid to Asiana Airlines. Analysts suggest that the creditors' pressure on HDC Hyundai Development through a certified letter to proceed with the acquisition, and HDC Hyundai Development's expression of doubts about the reliability of financial statements in official documents, as well as pointing out the approval of additional borrowing without Asiana Airlines' prior consent and support for insolvent affiliates, may be preparations for future litigation.

Regarding this, the creditors stated, "The creditors are not the direct party in the deposit lawsuit," and "We are not currently considering the possibility of litigation."

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