Saneun Refuses Reinspection by Asiana... Creditors to Launch 'Plan B' if Sale Fails

Asiana Airlines, expected to renegotiate the acquisition with HDC Hyundai Development Company, held an extraordinary general meeting of shareholders on the morning of the 15th at its headquarters in Osoe-dong, Gangseo-gu, Seoul, where it resolved to increase the total number of shares to be issued and the limit of convertible bonds for capital expansion. After the shareholders entered, employees were removing the guide signs. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kangwook Cho] On the 3rd, the Korea Development Bank (KDB) expressed a refusal stance, calling HDC Hyundai Development Company (HDC Hyundai) excessive in its demand for a re-due diligence of Asiana Airlines. It also stated that if HDC Hyundai, the acquiring party, does not show sincerity, the acquisition is inevitably doomed to fail.

On the same day, Choi Dae-hyun, Vice President of KDB's Corporate Finance Division, said at an online press briefing, "Requesting a 12-week re-due diligence in writing makes us question whether there is no sincerity in the acquisition and if the intention is merely to delay the closing of the deal," adding, "We cannot accept it."

Vice President Choi pointed out, "Despite having had sufficient due diligence for 7 weeks and a 6-month acquisition activity period during the M&A process, HDC Hyundai is making excessive demands beyond the usual M&A procedures."

He emphasized, "Although we have experienced numerous M&As, this is the first time that a face-to-face meeting itself is a condition," and added, "If HDC Hyundai continues to refuse basic face-to-face negotiations and does not show any advanced actions demonstrating sincerity in the acquisition, the failure of the acquisition is currently inevitable."

However, Vice President Choi added, "If the acquisition is assumed, discussions can be possible within a limited scope for analyzing the business environment and financial structure after the acquisition." He further explained, "We are requesting corrective actions by the 11th and can notify contract termination on the 12th. Whether the notification will actually be executed depends on HDC Hyundai's final confirmation of intent."

KDB is also preparing a 'Plan B' in case the sale fails.

Vice President Choi said, "If the sale fails, we are preparing measures led by creditors to stabilize the market and provide liquidity support so that Asiana Airlines' operations can normalize, including management control through the conversion of perpetual bonds into equity," adding, "After stabilizing management, we will actively consider handling subsidiaries and separate sales based on market conditions." However, he clarified that this would be creditor-led management, not nationalization.

Regarding new potential buyers if the acquisition fails, Vice President Choi explained, "For large private equity funds (PEFs), government review of investment eligibility must precede," and added, "We will keep the door open for other large corporate groups as well."

KDB expects that a lawsuit for the return of the deposit will be inevitable if the acquisition fails. It specifically stated that the responsibility lies with HDC Hyundai, not Kumho Industrial. However, from the creditors' standpoint, they will seek ways to avoid hindering resale or normalization as much as possible when terminating the contract.

On the possibility of support from the Industrial Infrastructure Fund after a failed sale, Vice President Choi said, "(Asiana Airlines) is judged to meet the fund's support requirements as stipulated in the Enforcement Decree of the Korea Development Bank Act," but added, "However, whether to provide support, its scale, and method are matters for the Fund Management Deliberation Committee to decide."

Regarding the meeting between KDB Chairman Lee Dong-geol and HDC Group Chairman Chung Mong-gyu, he said, "They have met about twice," and added, "Considering the impact of COVID-19, KDB has kept the possibility of adjusting acquisition conditions sufficiently open, and Chairman Lee requested at a basic level through meetings that HDC Hyundai respond to negotiations."

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