Asiana bid likely to be two-way race
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.
Asiana Airlines’ Airbus A350