15-Mar-2010 11:13 AM

Korea Development Bank considers capital reduction for Asiana Airlines

Kumho Asiana Group's creditors, including its main creditor, Korea Development Bank, have reportedly requested the largest shareholders of Kumho Asiana subsidiary, Asiana Airlines, to agree on a debt-to-equity swap and capital reduction, in return for KRW120 billion (USD106 million) in new loans (Yonhap News/Korea Herlad/JoonAng Daily/Reuters/Korea Times, 13-Mar-2010). The creditor banks decided in late Dec-2009 that two of the group's units (Asiana and Korea Kumho Petrochemical Co) would need to improve their finances through rigorous self-restructuring efforts. Last week, Kumho Industrial stated it planned to buy back its 22.6 million shares in Asiana from Kumho Petrochemical, which would make the group’s construction unit the largest stakeholder of Asiana with a 33.5% share. Kumho Industrial reportedly transferred its 12.7% stake in the carrier to the group’s petrochemical affiliate on 21-Dec-2009, just prior to the creditors announcing the debt rescheduling plan. The company's creditors plan to complete their due diligence on the company by the end of Mar-2010.

Korea Development Bank: "We have asked major shareholders [of Asiana] to take some responsibility, including capital write-downs, in return for a new capital injection...Nothing has been decided regarding which shareholders should sacrifice how much. The capital write-down may not take place at all, if we find Asiana Airlines financially sound enough," spokesman. Source: Reuters, 13-Mar-2010. 

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