Aircraft maker selling 42 percent of its stake; Korean Air interested in acquisition


Potential bidders for Korea Aerospace Industries will be unveiled on Thursday, while Korean Air has already expressed its willingness to take over the nation’s sole aircraft maker.

A shareholders’ committee of KAI, led by the state-run Korea Finance Corp., announced last month that it would invite letters of intent to sell off their 41.75 percent stake in the company by Aug. 16.

While Korean Air is poised to make bids for KAI, at issue is whether contenders will also participate in the bidding competition. Unless there are at least two contenders, the Aug. 16 bidding will be nullified.

KAI shareholders have attempted to sell the financially troubled aircraft maker twice, in 2010 and 2011, but failed to find a proper bidder amid fierce resistance from the labor union.

The fresh move by Korean Air comes after Cho Yang-ho, chairman of Hanjin Group, which owns the flag carrier, expressed interest in acquiring the KAI recently in a bid to seek positive synergy with the nation’s largest air carrier that also produces military aircraft.

Cho has said he is especially interested in the KAI engineers who have experience in aircraft manufacturing, adding that some international firms have also proposed joining the bidding as well. He did not elaborate on their names.

But some market observers raised the possibility that the KAI sale may be delayed to next year in consideration of the December presidential election and opposition from KAI’s union to the privatization plan.

The total of 40.7 million shares to be sold are currently owned by KAI’s stockholders committee. KAI is owned jointly by the Korea Finance Corp., Samsung Techwin Co., Hyundai Motor Co. and Doosan.

Should all go smoothly, the finance corp. expects to complete the transaction by year’s end.

The finance corp., however, said of its 26.4 percent stake in the company, 15 percent will not be sold to ensure public control of KAI, which is a major arms manufacturer.

The company makes the T-50 Golden Eagle supersonic trainer jet and the Surion utility helicopter.

The KAI sale is the last of merger and acquisition deals led by the finance corp. since last year. It sold stakes in Hyundai Engineering and Construction to Hyundai Motor Group in 2011. The state-run company also sold major stakes in Hynix Semiconductor to SK Group recently.

KAI is the nation’s sole aerospace company established in 1999 by three private firms. The company was listed on Korea’s main bourse in June.

The company has marked more than 1 trillion won of revenue annually since 2009. It saw operating profits of more than 100 billion won last year.

The company is focused on producing aerospace technology for military use, but seeks to leap forward as a comprehensive airplane manufacturer in 10 years.

By Kim Yon-se (kys@heraldcorp.com)