[courtesy of Asiana Airlines]
Investors dumped shares of South Korea's second largest carrier Asiana Airlines Monday on concerns that its decision to increase capital may hurt the value of shareholder and financial structure.
Asiana, a key subsidiary of Kumho Asiana Group, fell 11.54 percent to 4,600 won (4.13 US dollars) after it announced a capital increase of 166.2 billion won.
The carrier said the increase was aimed at reducing its debt, but there have been rampant market suspicions related to the group's attempt to take back Kumho Tire Co., the world's 12th largest tire maker with plants in China, Vietnam and the United States.
Creditors acquired a 42.01 percent stake in Kumho Tire when the group put it under a debt workout program in December 2009 due to a severe liquidity crunch.
This month, creditors will kickstart the process of selling a controlling stake in Kumho Tire, which graduated from a workout program in late 2014. The sale price is estimated at between 700 billion won and 1 trillion won.
HI Investment and Securities said Asiana's capital increase fueled market suspicions that it could be used to finance a bid by Kumho Asiana Group chairman Park Sam-koo to buy back Kumho Tire.
Park has already bought back Kumho Industrial from creditors last year as part of his efforts to rebuild the tattered empire and accelerate the third-generation transfer of group leadership to his eldest son, Park Se-chang.
The chairman has the preemptive right to buy back Kumho Tire as an individual, but there have been doubts about his ability to finance the deal.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
