SEOUL • The top shareholder of South Korea's second-largest carrier, Asiana Airlines, said yesterday it would sell its entire stake in the debt-ridden airline to keep it afloat, sending shares of the carrier and its budget arm 30 per cent higher.
The move caps weeks of financial uncertainty for Asiana Airlines, whose troubles started last month, when it failed to win auditors' sign-off on its 2018 financial statements, triggering warnings of credit rating downgrades and the resignation of its parent group's chairman.
Its shares have more than doubled since then as top shareholder Kumho Industrial pledged to sell Asiana Airlines should it fail to reduce the airline's debt, raising expectations for potential takeover interest.
But the original restructuring plan was rejected by creditors last week for not being enough to restore market trust in the indebted carrier, which has 3.4 trillion won ($4 billion) in short-term obligations, including 1.3 trillion won of loans maturing this year.
In a revamped proposal yesterday, Kumho - which owns one-third of Asiana - said it would sell the entire stake and also offer the 500 billion won holding as collateral to creditors for interim loans.
"This is going to be a hot deal, as many local conglomerates want to get into the airline business, so there are expectations over a coveted takeover deal," said KTB Investment Securities analyst Lee Han-joon.
Korea Investment and Securities analyst Choi Go-woon said several conglomerates, or a consortium of firms involved in duty-free businesses, may be interested in Asiana.
Telecommunications-to-chemicals conglomerate SK Group and retail-focused Aekyung Group, which also has budget carrier Jeju Air, could be potential suitors, he added.
Representatives for SK Group and Jeju Air denied any interest in buying the Asiana stake.
Shares in Asiana were up by the daily limit of 30 per cent at their highest in more than three years. Shares in its low-budget carrier affiliate, Air Busan, also surged 30 per cent.
Asiana has been struggling to get its finances in order as it battles rising fuel costs and competition from low-cost carriers.
Kumho Industrial has yet to pick a sale manager. Its shares also jumped 30 per cent yesterday.
Officials from family-run Kumho Asiana Group and its creditors have been negotiating the revised restructuring plan since the initial proposal was turned down, two officials from a main creditor told Reuters.
State-run Korea Development Bank, the main creditor of Kumho Asiana Group, said creditors also met yesterday to review the new plan.
The lender said creditors viewed the plan - including the sale of the Asiana stake - positively and would support the sale.
Kumho Asiana Group's former chairman, Mr Park Sam-koo, is the top shareholder of holding company Kumho and Company, which in turn has a 45 per cent stake in Kumho Industrial.