Despite months of back-and-forth and attempts at breakthroughs, the acquisition talks between HDC Hyundai Development Company and Asiana Airline are likely to fall apart, according to reports Thursday.
In an email Wednesday, the building company once again told Korea Development Bank, the airline’s creditor, to undertake a fresh round of due diligence for 12 weeks, local reports revealed. KDB and the airline’s owner Kumho Industrial have been adamant against another round of due diligence. One media outlet said Kumho could announce the deal is dead as soon as sometime this week.
HDC said that it cannot confirm the details of the reports. Both KDB and the Export-Import Bank of Korea, another creditor of the airline, declined to comment on the matter.
Once the deal is officially terminated, Asiana will be placed under receivership of creditor banks and some 2 trillion won ($1.68 billion) in the form of key industry stabilization funds would be injected into the airline to keep the troubled business afloat.
Since HDC offered to buy Asiana last year, talks had stalled, particularly as the aviation industry tumbled amid the COVID-19 pandemic.
But optimism had cautiously been raised as Kumho and HDC agreed to meet face-to-face, followed by a meeting between the chairs of KDB and HDC late last month to seek a breakthrough for the troubled deal.
After the undisclosed meeting on Aug. 26 in Seoul, KDB had said the ball was in HDC’s court, with news reports suggesting the bank had suggested new conditions for the deal that would lower the construction firm’s immediate financial burden by 1 trillion won.
HDC’s stance, however, on due diligence has remained unmoved throughout the talks, a request that the company has insisted on since July, despite Asiana Airline and its creditors rejecting the request on multiple occasions.
Previously, the company argued that both Kumho and Asiana had not been earnest during the seven-week due diligence, and accused the former of not providing sufficient data.
In early August, however, KDB Chairman Lee Dong-gull said during a teleconference, “If the deal falls apart, all the blame must go to HDC.”
“Kumho and Asiana creditors acted sincerely, but HDC raised the risk of the deal collapse,” he added.
Prior to his statement, Kumho Industrial, the largest shareholder of the airline, had also criticized HDC’s calls for another round of due diligence, calling it an excuse to cancel the deal.
By Yim Hyun-su (email@example.com