Key creditor seeks to extend deadline for Asiana's self-rescue package

Lim Chang-won Reporter Posted : 2019-04-03 18:48 Updated : 2019-04-03 18:48
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[Courtesy of Asiana Airlines]

SEOUL -- The key creditor of Asiana Airlines will push for the extension of a deadline for submitting a new self-rescue package aimed at resuscitating South Korea's second-largest flag carrier after its chairman stepped down to take responsibility for a credit crisis.

Last year, Korea Development Bank (KDB), a state policy bank, signed a memorandum of understanding (MOU) that required Asiana to improve its financial status through sales of noncore assets and the issuance of convertible and perpetual bonds. The deal expires on April 6.

"Through negotiations between creditors, we will seek a new MOU while working out a strong normalization scheme," a KDB official said, adding the deadline would be extended by a month.

Financial Services Commission (FSC) chairman Choi Jong-ku said Wednesday that Asiana should submit a credible self-rescue plan if it wants a debt rollover. "It is important for the company to submit an authentic and sincere plan," he told reporters, adding Asiana's crisis was related to governance.

Last week, Kumho Asiana Group chairman Park Sam-koo abandoned all executive posts at Asiana and other group units to take responsibility for causing market disturbances with an intransparent accounting report by the debt-stricken carrier.

"All of this is totally my fault and responsibility," Park said, urging the group to restore trust from customers and stabilize its financial status as soon as possible. However, shares of Asiana and other group units remained weak due to lingering concerns about the group's financial status.

It would be difficult for Asiana to gain market trust again if Park reneges on his promise, Choi said, recalling that the outgoing chairman once retired and returned to management.

Asiana has tried to resolve liquidity concerns and repay its maturing debt by raising money through asset sales and the issuance of convertible bonds and asset-backed securities. However, the company lost market confidence last week due to its unclear 2018 financial statement, raising concerns about its debt repayment and a group-wide liquidity crunch.

Due to currency-related losses and increased jet fuel costs, Asiana swung to a net loss of 10.4 billion won last year from a net profit of 248 billion won a year ago. Asiana's debt stands at 3.2 trillion won.