August 04, 2020 12:21
State-run Korea Development Bank, the main creditor of Asiana Airlines, has sent an ultimatum to property developer HDC Hyundai Development to decide by Aug. 11 whether it wants to buy the carrier or not.
KDB president Lee Dong-geol said in an online press briefing on Monday, "The time for a decision is approaching and there can be no more delay."
HDC insists that the terms of the contract must be revised to reflect ballooning losses at Asiana due to the coronavirus epidemic. Last week it demanded another 12 weeks of due diligence, saying the cast-strapped carrier failed to live up to its end of the acquisition deal.
HDC formed a consortium with Mirae Asset Daewoo late last year and when their bid of W2.5 trillion was accepted, they paid a W250 billion deposit (US$1=W1,196). But the coronavirus epidemic erupted soon afterwards and the global airline industry hit hard, prompting HDC to get cold feet.
But the KDB president said, "Detailed due diligence already took place over seven weeks and we believe another due diligence is difficult. Any risk of the contract falling through comes from HDC."
KDB claims HDC ignored repeated requests for a face-to-face meeting and is simply stalling for time.
HDC issued a short statement saying, "More time is necessary, and we have no further comment." The consortium earlier said that the target of acquisition has changed due to the pandemic and Asiana's financial woes were not fully reflected in the first due diligence.
Now chances are increasing of a drawn-out legal dispute with Asiana parent Kumho Industrial.
One attorney specializing in mergers and acquisitions said, "HDC seems to be sticking to its guns because it needs to build a favorable case in the event of a lawsuit to get back its downpayment."
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