Kumho Petrochemical "Opposes Asiana Airlines Equal Capital Reduction... Conveys Position to KDB"

"Direct Submission of Opposing Opinion Document to Saneun This Afternoon"

[Asia Economy Reporter Hwang Yoon-joo] Kumho Petrochemical Group has expressed opposition to the bond banks regarding Asiana Airlines' decision on the 'equal capital reduction.'

According to financial circles and industry sources on the 3rd, Kumho Petrochemical directly conveyed its opposition in writing to the Korea Development Bank regarding Asiana Airlines' 3-for-1 free capital reduction decision that day. Kumho Petrochemical is the second-largest shareholder of Asiana Airlines, holding 11.02% of shares.

Kumho Petrochemical is also known to have sought legal advice internally concerning the 'equal capital reduction.' A financial official stated, "Kumho Petrochemical has advocated for a 'differential capital reduction' for Asiana Airlines," adding, "If necessary, they may consider litigation to avoid legal liabilities such as breach of trust."

Earlier, Asiana Airlines announced that it would proceed with a 3-for-1 free capital reduction in consultation with the Korea Development Bank and other bond banks to cover losses caused by the COVID-19 pandemic and improve its financial structure. A free 'equal capital reduction' means reducing the number of issued shares to one-third. Generally, in the case of insolvent companies, a 'differential capital reduction' is implemented to hold major shareholders accountable by applying different reduction ratios to general shareholders and major shareholders.

Asiana Airlines explained the reason for deciding on an equal capital reduction for the major shareholder Kumho Industrial's shares as follows: "The major shareholder's shares were provided as collateral to the bond banks simultaneously with the sale decision, the major shareholder has not been involved in company management at all since the sale decision in April 2019, and the M&A deal, which was about to be finalized, was canceled due to COVID-19."

The Korea Development Bank will find it difficult to avoid criticism that it is shifting the responsibility for the failure of Asiana Airlines' restructuring onto Kumho Petrochemical and general shareholders with this decision. If a differential capital reduction is implemented, the collateral value of Asiana Airlines' shares and the shares of Kumho Express held by Chairman Park Sam-koo will decline, requiring the bond banks to increase their provisions for contingent liabilities.

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