Aviation Industry 'Big Deal' Turbulence Continues… HDC Hyundai Development Company Proposes "Reinspection" to Kumho

Asiana Airlines, caught in a stalemate between HDC Hyundai Development Company and its creditors that stalled the sale process, held an extraordinary general meeting on the 15th to initiate capital expansion. On this day, Asiana Airlines convened the extraordinary general meeting at its headquarters in Gangseo-gu, Seoul, and approved an amendment to the articles of incorporation to increase the total number of issued shares and the issuance limit of convertible bonds (CB). The photo shows the Asiana Airlines headquarters where the extraordinary general meeting was held. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Yoo Je-hoon] Amid turbulence in major mergers and acquisitions (M&A) in the aviation industry, the Asiana Airlines M&A, classified as a 'big deal,' appears to be stalled for the long term.

According to the industry on the 26th, HDC Hyundai Development Company (HDC Hyundai) issued a statement saying, "Since last April, we have conveyed matters requiring re-examination through more than 10 formal official letters, but even after about 100 days, we have not received any materials or even the basic contract. We propose a re-inspection period of about 12 weeks starting mid-next month."

This statement came about a month and a half after HDC Hyundai requested 'renegotiation' last month. Meanwhile, Kumho Industrial and others have demanded the deal's closure, claiming that the preconditions for acquisition have been met.

HDC Hyundai listed the key issues requiring re-examination as ▲ the 'adverse' opinion by an external auditor on the 2019 internal accounting control system ▲ an increase in debt by 2.8 trillion KRW and borrowings of 1.7 trillion KRW ▲ the possibility of weakening the buyer's control due to additional issuance of perpetual bonds ▲ unfair support issues related to in-flight meal affiliates ▲ unfair support issues involving low-interest loans between affiliates ▲ investment losses in Lime Asset Management private equity fund ▲ unfair support issues through Port Korea Run & Hit private equity fund. HDC Hyundai emphasized, "Reviewing these points will allow a reasonable confirmation of whether the preconditions for closing the deal have been met."

In the industry, since HDC Hyundai clearly stated that the preconditions have not been fulfilled, contrary to Kumho Industrial's claims, there is speculation that HDC Hyundai has begun 'building justification' in preparation for future disputes. In its statement, HDC Hyundai also pointed out, "Recently, Kumho Industrial and Asiana Airlines unilaterally and without basis designated the deal closing date and notified our consortium. It even raises reasonable suspicion that rather than making efforts to close the deal, they have internally decided to terminate the contract and have only prepared for that."

HDC Hyundai further stated, "Kumho Industrial and Asiana Airlines' claims of contract termination rights have no basis whatsoever," and emphasized, "We hope that sincere discussions based on trust among stakeholders will proceed in the future and that the deal will be successfully closed."

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