Creditors to channel $1.4 billion
Creditors of Asiana Airlines will funnel around $1.4 billion into the debt-ridden airline company to help it deal with liquidity problems and speed up its sale, the country’s chief economic policymaker said.
The state-run Korea Development Bank and other creditors will buy some $450 million worth of perpetual bonds from Asiana and open a fresh credit line amounting to around $700 million.
Finance Minister Hong Nam-ki disclosed the scheme on April 22 in an economy-related ministers’ meeting. The measures are expected to be taken in the near future.
“Creditors have come up with the plan because Asiana’s business is in good shape and its major shareholders also submitted a reliable self-rescue plan, which includes the sale of the firm,” Hong said.
“Asiana will streamline its operations to improve its profitability. At the same time, the company will seek mergers and acquisitions with the aim of signing a deal this year.”
And Hong, concurrently deputy prime minister, asked related parties to put out best efforts so that the nation’s second-largest flag carrier will get back on track as early as possible.
The Seoul-based company netted a loss of $94.4 million last year, which deteriorated its financial status – Asiana owes about $2.8 billion to lenders and other financial firms, and it is required to repay a third of the amount in 2019.
Worse, Asiana’s auditor of Samil PricewaterhouseCoopers declined to sign off its 2018 financial statements of the carrier citing a lack of information, which prodded the Seoul bourse operator to suspend trading of Asiana shares last month.
In the face of snowballing debts and the stock market crisis, Kumho Asiana Group Chairman Park Sam-koo resigned, asking for additional funds from creditors.
But creditors refused to accept the request, instead urging the group to dispose of Asiana, and Kumho accepted the demand.
Included in potential buyers of the firm are SK, Hanwha, CJ, and Aekyung groups, according to observers. The estimated selling price is around $1 billion, but if Kumho sells off subsidiaries like Air Seoul and Air Busan together, the price is likely to be doubled.