(Asiana Airlines)
Market pessimism over HDC Hyundai Development Company’s purchase plan of the country’s second-largest airline grew Monday, with Asiana Airlines stocks plunging.
Shares of the airline closed at 3,560 won ($2.98) on Monday, down 2.86 percent from the previous session. However, HDC shares remained almost unchanged and were being traded at 33,100 won.
The drop in stock price comes as HDC, which leads a consortium with Mirae Asset Daewoo to take over Asiana, called for another round of due diligence on the flag carrier on Sunday citing insufficient information about its financial status.
Local reports noted that Korea Development Bank CEO Lee Dong-geol has called for a plan B following HDC’s statement. The state-run policy bank is one the main creditors.
Market watchers have previously cast concerns over the troubled airline’s fate as the impact of the COVID-19 pandemic shows no sign of stopping soon.
Professor Hurr Hee-young at Korea Aerospace University said there are two possible scenarios.
“It appears that (HDC) is trying to adjust the acquisition price which currently stands at 2.5 trillion won, as well as calling for government support in terms of acquisition financing.”
”It is also possible that they are aiming for a no deal and simply looking for a way out,” he added.
In June, Eugene Investment & Securities said it would take “a considerable amount of time” before Asiana Airlines fully recovers as hopes for the HDC’s buyout deal were fading.
In March, all Asiana staff took a 33 percent pay cut as part the company’s cost-restricting efforts.
In its call for a new due diligence review, the construction company has citied a sizable increase in debt and borrowings, as well as a growing net operating loss.
“Trust is the most crucial factor HDC is pursuing in completing the deal,” said a senior official on Sunday.
“Asiana Airlines has done its best to complete the acquisition deal successfully and we will continue our efforts for closure,” a company official said.
The struggling domestic aviation industry hit a major snag last week when Jeju Air pulled out from a buyout deal with low-cost carrier Eastar Jet citing uncertainties and unfulfilled preconditions.
By Yim Hyun-su (hyunsu@heraldcorp.com)