Hoban Construction, a mid-tier local builder, showed much confidence in winning a controlling stake in Kumho Industrial, saying the company has enough cash to satisfy creditors.
Kim Sang-yeol, founder and chairman of Hoban Construction, said his firm is in a position to bid 1 trillion won ($ 906.8 million) to acquire a 57.5 percent stake in Kumho Industrial, which owns key affiliates of Kumho Asiana Group, including the country’s second-biggest air carrier Asiana Airlines.
“My company has sufficient cash flow to pay 1 trillion won as per the guidelines of Kumho Industrial’s creditors,” he told reporters on the sidelines of a general meeting of the Korea Chamber of Commerce and Industry on Wednesday.
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| Hoban Construction chairman Kim Sang-yeol. (Yonhap) |
Established in 1989 with a capital of 100 million won, Hoban has secured financial soundness by solely focusing on housing business and now its own capital surpasses 2 trillion won, according to the chairman.
On March 3, underwriters of the takeover deal shortlisted five firms to bid for the controlling stake in Kumho Industrial, including Hoban and four private equity funds ― MBK Partners, IMM Investment Corp., IBK Securities-Keistone Partners and Jabez Partners.
“Even if we successfully take over Kumho Industrial, I don’t expect our construction business to expand overseas,” he said.
Kim is instead eyeing the synergy between both construction firms to grow in the domestic housing market after merger. Hoban and Kumho are the country’s 15th and 20th builders in terms of construction ability, respectively.
For other bidders, there is more to Kumho Industrial than just being a construction company.
Kumho Industrial holds a 30.1 percent stake in Asiana Airlines, and Asiana holds a 46 percent stake in its budget carrier unit Air Busan, meaning that the winner can get control of the two airlines.
Market watchers, however, said the PEFs have lower possibility of winning the bid without forming a consortium with a strategic investor as creditors of Kumho Industrial want a firm eligible to manage the company.
While the fate of Kumho Industrial is still up in the air, Kumho Asiana Group is considered a strong candidate for the deal as its chairman Park Sam-koo has the right of first refusal ahead of the preferred bidder.
Park has expressed a strong will to retake Kumho Industrial, the group’s holding company and recover group owner status. The chairman had to hand over control of the firm to creditors in 2010 due to soaring debts after a failed takeover deal with Daewoo Engineering and Construction.
“Kumho Asiana Group has not changed its position to buy back Kumho Industrial,” the company’s spokesperson said but declined to comment further.
By Park Han-na (hnpark@heraldcorp.com)
