HDC Hyundai Development Co. on Sunday called for an additional round of due diligence on Asiana Airlines as it reaffirmed its interest to close the $2.2 billion deal to take over the country’s second-largest full-service airline.

However, this move is casting doubts over the successful closure of the mega-deal to acquire Asiana considering the aggravating financial situation of the airline amid the protracted COVID-19 impact on the aviation industry.

The midsized construction unit of HDC Group said in a statement it informed Asiana and its largest shareholder Kumho Industrial of its stance on Friday, calling on the airline and its subsidiaries -- including low-cost carriers Air Seoul and Air Busan -- to carry out due diligence for another 12 weeks starting mid-August.

Among the reasons cited for the request are sizable increases in debt and borrowings, as well as a growing net operating loss.

HDC also said Asiana’s 2019 fiscal report revealed a negative opinion about the firm’s accounting control system after an external audit, while it has found an additional 2.8 trillion won ($2.3 billion) in debt and 1.7 trillion won in loans.

HDC also claimed Asiana and Kumho haven’t met the prerequisites for the planned acquisition.

“Trust is the most crucial factor HDC is pursuing in completing the deal,” said a senior official.

In response to the HDC statement, one official at Asiana on Sunday said that “Asiana Airlines has done its best to complete the M&A deal successfully and will continue to meet all the requirements diligently until the deal is finalized.”

Sunday’s statement comes as local news reports revealed earlier this month that Kumho had urged HDC to finalize the acquisition deal with intention -- a request that HDC said “breaches their agreement” as the airline has failed to fulfil the prerequisites.

It also added it has “reasonable suspicion” that Kumho and Asiana have been preparing to terminate the agreement, given the reports in recent weeks that the two are poised to do so.

HDC, Kumho and Asiana were initially set to ink the acquisition deal on June 27 but the date was pushed back to sometime during the second half of this year, due to the snowballing impact of the coronavirus pandemic on the aviation industry.

In June, Asiana said it had provided sufficient data and explanations for its financial status, as stated in the agreement, after HDC repeatedly called for negotiations over the terms of the agreement.

However, HDC disputed the claim by saying it has notified both Kumho and Asiana of the details that need to be double-checked on at least 10 separate occasions since early April. It added it has not been provided with any official data concerning the matters.

Despite the stalemate in pounding out an agreement, HDC has reaffirmed its interest in acquiring a majority stake in the airline.

“Hyundai Development’s initial intent to acquire Asiana Airlines and contribute to the normalization of South Korea’s aviation industry and solidify its international competitiveness remains the same as before,” the company said.

HDC’s acquisition of Asiana was announced in December.

A consortium of HDC and Mirae Asset Daewoo signed a deal to acquire a controlling 31 percent stake in the country’s second-largest air carrier from Kumho Industrial for 2.5 trillion won.

But as the pandemic swept through the aviation industry, Asiana underwent an aggravating financial trouble as it was forced to cut its flights to China by 79 percent and to Southeast Asia by 25 percent.

By Yim Hyun-su (hyunsu@heraldcorp.com)