April 24, 2019 10:49
State-run Korea Development Bank and other creditors of Asiana Airlines have decided to give the cash-strapped carrier W1.6 trillion in emergency loans before they sell it off (US$1=W1,142).
Finance Minister Hong Nam-ki chaired a meeting of officials on Tuesday and announced that the bailout will include the purchase of W500 billion in perpetual bonds, a W800 billion overdraft and W300 billion in debt guarantees.
He said the measures are aimed at easing pressing liquidity problems by buying the airline's debt, lending it more money and guaranteeing loans it has taken out from other financial institutions. "We made the decision, because business conditions for Asiana remain sound and its major shareholders' self-rescue plans include the sell-off."
The bailout is much more generous than the W500 billion plus that was discussed last week and came after troubled parent group Kumho Asiana reluctantly agreed to let creditors sell its flagship airline subsidiary, reducing it to an also-ran among Korea's conglomerates.
"An agreement was reached during the meeting to help investors regain trust in Asiana Airlines by providing higher-than-expected support as its maturing loans total W1.3 trillion," an official said. "There is very little chance of the W800 billion overdraft being tapped once market confidence in Asiana Airlines is restored."
Hong said Asiana will shut down money-losing routes "and make other attempts to improve its financial condition." It is to be sold by the end of the year.
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