Lee Dong-geol and Chung Mong-gyu Meeting... Is the Renegotiation of Asiana Airlines Officially Starting?

[Asia Economy Reporter Kangwook Cho] The surprise meeting between Lee Dong-geol, Chairman of the Korea Development Bank, and Chung Mong-gyu, Chairman of HDC Hyundai Development Company, has sparked strong speculation that the acquisition of Asiana Airlines will enter a new phase. Some even predict that the Asiana Airlines deal will enter full-scale renegotiations.

According to financial circles on the 27th, the two chairmen met for about an hour yesterday afternoon at an undisclosed location in Seoul.

It is known that there were no attendants at the meeting between the two chairmen, so the specific details of their conversation have not been disclosed. However, it was reported that Chairman Lee said at the meeting, "If HDC Hyundai Development decides, we will support all possible aspects (from the Korea Development Bank)."

The fact that the two chairmen met unexpectedly without attendants just two days before the deal closing date (June 27) has led to speculation that the foggy Asiana Airlines acquisition negotiations may have entered a new phase.

The market expects that a full-scale renegotiation table will be set up soon. From HDC Hyundai Development’s perspective, if they give up the acquisition without renegotiation, they will bear full responsibility for the failure of the acquisition. In this case, HDC Hyundai Development is likely to be at a disadvantage in the expected 250 billion KRW deposit lawsuit.

In future renegotiations, a tense standoff over detailed terms between the creditors and HDC Hyundai Development is anticipated.

[Image source=Yonhap News]

HDC Hyundai Development insists that the acquisition of Asiana Airlines should be renegotiated from scratch, citing the current situation, which is significantly different from when the deal was signed (end of December last year), including the increase in Asiana Airlines’ debt ratio. Accordingly, the price of old shares to be paid to Kumho Industrial, the conversion of 50 billion KRW of Asiana Airlines’ perpetual bonds into equity, and the repayment of Asiana Airlines’ loans are expected to be on the negotiation table.

From the creditors’ side, including the Korea Development Bank, there is a consensus that since the aviation industry has been hit hard by the COVID-19 pandemic, active support is possible if HDC Hyundai Development decides to proceed with the acquisition. However, concerns about future preferential treatment controversies are holding back the creditors.

A financial official said, "Now that the meeting between the two chairmen has taken place, the possibility of failure is becoming slim," adding, "Both sides know that if the Asiana Airlines renegotiation fails, it will be difficult for either to avoid blame, so sharp confrontations are expected at the renegotiation table."

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