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Kumho kicks off Asiana Airlines stake sale

Kumho Asiana Group has begun the process of selling its entire stake in Asiana Airlines, as first announced in April.

Credit Suisse is sole advisor for the sale, and tells FlightGlobal the seller made a public filing as of Thursday morning, but would not comment on the transaction timeline.

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Kumho Asiana Group has started a process to sell its cornerstone stake in Asiana Airlines

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Kumho Asiana Group owned a 33.5% stake in Asiana Airlines through de facto holding company Kumho Industrial, however that has been reduced to 31%, following the conversion of about W80 billion ($67.7 million) in private bonds to stock.

The entire Asiana stake is up for sale, though the process has just begun so there are “no fixed price or prospective buyers,” says Kumho Industrial.

“Although the sale schedule is flexible, we are working hard to complete the sale by the end of this year.”

Asiana itself would not comment on the sale.

The carrier's share price closed Wednesday at W6,520, giving the company a market capitalisation of W1.34 trillion. This suggests the transaction could potentially be worth about W415 billion.

Other South Korean conglomerates such as SK, CJ, and Hanwha are seen as potential bidders for the country’s second-largest airline, according to local media reports.

Asiana has been under financial pressure, in part due to the struggles of Kumho Asiana Group.

The sale is part of a wider rescue plan for the heavily indebted conglomerate, which had been seeking around W500 billion in emergency loans from Korea Development Bank, its largest creditor.

In the past two months, the Star Alliance carrier has cut four routes and ceased first class services to focus on boosting profits.

Last month, it agreed to a W226 billion line of credit facility from Korea Exim Bank to fund its operations. In April, it received a W1.6 trillion capital injection from the Korea Development Bank in April, while the airline’s creditors also subscribed to W500 billion in perpetual bonds.

Asiana’s operating profit for the quarter ended March 2019 nearly halved to W7.2 billion, as a weak cargo market offset robust passenger demand at its budget units.

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