April 26, 2019

Credit Suisse to advise on Asiana

Parent Kumho Industrial Co has tapped Credit Suisse to manage the stake sale of struggling Asiana Airlines, kicking into gear one of this year’s priciest M&A deals.

Credit Suisse has been mandated to lead the sale of Kumho’s 33.47% stake in South Korea’s second-largest carrier.

Kumho also has hired Ernst & Young Han-Young and Shin & Kim as accounting and legal advisers respectively.

Asiana has landed a maximum of KRW1.6 trillion ($1.4 billion) of fresh capital under a generous rescue package aimed at adding appeal to the country’s second full-service carrier in a search for a buyer, hopefully within the year.

Under terms of the bail out, existing creditors will assume KRW500 billion of new perpetual bonds and raise the credit ceiling to KRW800 billion.

Another KRW300 billion would be offered as a standby line of credit to be used as a backup source of funding for airline lease expenses.

The KRW1.6 trillion of financial support is over three-times what parent Kumho sought in return for surrendering the controlling stake in liquidity-short Asiana.

The rescue package was drawn up by state-run Korea Development Bank (KDB) and other lenders.

Creditors include KDB and Export-Import Bank of Korea (Kexim) as well as private lenders Shinhan Bank, Hana Bank and Standard Chartered Bank Korea.

Asiana is shouldering some KRW3.4 trillion of debt with KRW1.3rillion of loans maturing this year.

A sale of Asiana would likely include low-cost subsidiaries Air Busan and Air Seoul, with a price tag of about KRW2 trillion.