Asiana bid likely to be two-way race

The Korea Times - - FINANCE - By Kim Bo-eun [email protected]­re­atimes.co.kr

The bid­ding for Asiana Air­lines is likely to be a two-way race, as Aekyung Group has joined hands with Stone­bridge Cap­i­tal.

The Aekyung con­sor­tium is set to com­pete with a con­sor­tium of Hyundai De­vel­op­ment Com­pany and Mi­rae As­set Dae­woo, which has been con­sid­ered the strong­est con­tender thus far.

The Aekyung-Stone­bridge part­ner­ship came over a month af­ter Kumho E&C and Asiana’s cred­i­tors se­lected four par­ties as can­di­dates — the HDC con­sor­tium, Aekyung Group, Stone­bridge Cap­i­tal and a con­sor­tium of KCGI and Banker Street — on Sept. 10.

Aekyung, which op­er­ates the coun­try’s largest bud­get car­rier Jeju Air, was seek­ing a fi­nan­cial in­vestor. Stone­bridge Cap­i­tal had been look­ing for a strate­gic in­vestor.

This is be­cause Asiana’s cred­i­tors and fi­nan­cial au­thor­i­ties have banned fi­nan­cial in­vestors alone from bid­ding, as they are seek­ing an en­tity that will ac­tu­ally take over the air­line to con­tinue its op­er­a­tions, which is the strate­gic in­vestor’s role.

Stone­bridge ear­lier in­vested in 10 per­cent of Aekyung’s shares.

The con­sor­tium will re­solve Aekyung’s short­age of funds, with Stone­bridge’s as­sets un­der man­age­ment reach­ing 1 tril­lion won.

Yet the HDC Con­sor­tium still holds an ad­van­tage in terms of the scale of funds. Mi­rae As­set Dae­woo is the num­ber one in­vest­ment bank here.

Market ex­perts es­ti­mate that it will take 1.5 tril­lion won to 2 tril­lion won to ac­quire the air­lines to pur­chase 31.05 per­cent of Kumho E&C’s shares and 800 bil­lion won in newly is­sued shares, as well as man­age­ment rights. Asiana’s debt is es­ti­mated to ex­ceed 9.5 tril­lion won.

Aekyung’s strength is that the group knows how to op­er­ate air car­ri­ers. It made Jeju Air the num­ber one bud­get car­rier 14 years af­ter it was es­tab­lished. In ad­di­tion, the ac­qui­si­tion of Asiana could bring syn­ergy to the air­lines busi­ness of the group.

HDC does not have ex­pe­ri­ence in the in­dus­try, but plans to cre­ate a syn­ergy ef­fect with its ex­ist­ing busi­nesses in duty free shops and ho­tels.

The KCGI-Banker Street con­sor­tium is yet to find a strate­gic in­vestor in­ter­ested in tak­ing over man­age­rial rights.

Mean­while, there are also views that one of the major con­glom­er­ates such as SK, CJ, GS or Han­wha may join the KCGI con­sor­tium at the last minute.

The main bid­ding is set to take place on Nov. 7.

Korea Times file

Asiana Air­lines’ Air­bus A350

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