HDC Hyundai Development Company Demands Another Reinspection of Asiana... Creditors Enter 'No Deal' Phase, Initiate 'Plan B'

[Asia Economy Reporter Kangwook Cho] HDC Hyundai Development Company (HDC Hyundai) has once again maintained its position that a re-due diligence is necessary regarding the acquisition of Asiana Airlines. Despite the Industrial Bank of Korea's (IBK) proposal to change the acquisition conditions, HDC Hyundai has only repeated its existing stance, making it appear that the sale of Asiana Airlines is effectively heading towards a 'no deal' outcome.

According to related industries and financial circles on the 3rd, HDC Hyundai reportedly sent an email to IBK the day before stating, "There is no change in our intention to acquire Asiana Airlines, but a re-due diligence is necessary to eliminate uncertainties." This means they have upheld their previous position that a re-due diligence is needed since the situation has significantly changed compared to the contract signed in December last year due to the COVID-19 pandemic and other factors.

Earlier, on the 26th of last month, IBK Chairman Lee Dong-geol reportedly presented a revised proposal to reduce the financial burden related to the acquisition of Asiana Airlines during a final negotiation with HDC Group Chairman Chung Mong-gyu. Although Chairman Lee did not specify the exact amount of support, it is understood that IBK is considering a plan to 'co-invest' 1.5 trillion KRW each with HDC Hyundai. The plan reportedly also includes maintaining the perpetual bonds and convertible bonds issued by Asiana Airlines as capital.

However, after a week of deliberation, HDC Hyundai has only reiterated its demand for a re-due diligence, which the creditors have already rejected, leading to speculation that the acquisition contract for Asiana Airlines may ultimately fall through. The creditors reportedly interpret HDC Hyundai's repeated demand for re-due diligence over 12 weeks as a lack of acquisition intent.

The creditors and Kumho Industrial have already stated that the contract can be terminated from the 12th of last month and that they will decide whether to notify termination after confirming HDC Hyundai's final intention. Since the creditors plan to proceed with Kumho Industrial on the schedule depending on HDC Hyundai's response, there is also a possibility that Kumho Industrial, the seller, may notify contract termination as early as this week.

The creditors are expected to initiate the execution of 'Plan B' prepared in case the sale fails. If the sale of Asiana Airlines is ultimately canceled, the airline will come under the management of the creditors. Currently, the creditors are preparing to inject funds from the Industrial Stabilization Fund to normalize Asiana's management in the event of a failed sale. The support amount is expected to be around 2 trillion KRW.

A creditor official said, "If the sale falls through, we will implement the various alternatives we have prepared."

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