KDB vows to normalize Asiana if deal collapses
Korea Development Bank (KDB) will normalize operation of Asiana Airlines if Hyundai Development Company (HDC) backs out of its takeover deal with the cash-strapped airline, the state-run lender said Monday.
“As a main creditor of Asiana, we are considering a number of options to normalize the business operations of the airline under the scenario that the suggested but pending acquisition proposal between the interested parties comes to nothing,” KDB Vice President Choi Dae-hyun told reporters during an online press conference.
The message came amid the growing likelihood that HDC would not proceed with the takeover contract with Asiana at a time when the former continues to take what KDB deemed to be “unreasonable steps” to delay the M&A procedure.
Late last month, HDC demanded time to carry out an additional 12 weeks of due diligence on Asiana before finalizing the deal, but it did not provide any convincing reasons to back up the demand. Earlier, HDC already ended its due diligence on the airline after seven weeks.
“Our top priority is to normalize management of Asiana,” Choi said. “If HDC decides to cancel the deal with Asiana, we are going to focus on stabilizing the company and then push for its sale to a third party.”
He added the bank is leaving open all possibilities — including selling the firm to a conglomerate or affiliate.
The creditor also sent a message of warning to HDC, slamming the company for taking “irresponsible and insincere” steps in the M&A process.
“If HDC was sincere enough to acquire Asiana, the company should have taken relevant procedures — such as paying more contract deposits — but it did not make any such trustworthy actions,” Choi said.
Last year, HDC decided to purchase the airline at 2.5 trillion won, and paid 250 billion won, 10 percent of the total value of the deal for the contract deposit. If the company reverses its decision and opts not to buy Asiana, it will lose its deposit.
Even if HDC backs out of the deal it is possible it could file a lawsuit to recoup its deposit, citing reasons such as the falling corporate value of Asiana amid the coronavirus pandemic.
But HDC should be held legally accountable for the potential break-up of the deal, according to KDB Chairman Lee Donggull who also joined the online press conference.
“Asiana Airlines and Kumho Industrial, the largest shareholder of the airline, do not have to take any legal responsibility, as they have done the utmost to finish the M&A and taken all relevant steps,” Lee said.
He stepped up criticism of HDC and urged the company to return to talks immediately.
“All the arguments made by HDC were groundless and have been distorted maliciously,” the KDB chief said. “We do not understand the real intention of the firm’s demand to carry out due diligence once again.”
“We urge both interested parties to engage in final negotiations by opening up all possibilities, as the deadline for the M&A procedure comes closer.”
Kumho expressed its intent to call off the deal if the issue is not resolved by Aug. 12, in an official document sent recently to HDC.