South Korea’s Kumho Asiana Group is expected to see its assets more than halve after losing its flagship and most valuable member Asiana Airlines Inc. and be stripped of its conglomerate status, which is currently ranked at 28th.

Kumho Industrial Co., the parent company of Asiana Airlines, confirmed Tuesday it is in exclusive talks to sell its 31-percent stake in Korea’s No. 2 carrier to a consortium led by HDC Hyundai Development Co., which had submitted the highest bid of 2.5 billion ($2.1 billion).

The sale, which also includes the airline’s six subsidiaries, would involve handing over existing shares worth 400 billion won and issuing new shares worth 800 billion won.

Kumho Asiana Group’s assets totaled 11.4 trillion won as of this year, with Asiana Airlines accounting for 60 percent. Industry observers expect this to shrink to less than 5 trillion won after the transaction, leaving the conglomerate with only its construction unit Kumho Industrial and Kumho Buslines Co., an intercity transport service provider.

This would remove the group from the watchlist of conglomerates with assets of more than 10 trillion won that are subject to tighter scrutiny in cross-shareholding activities, as well as the list of companies with 5 trillion won or more that are required to post regulatory filings.

The move will also entail a group-wide reshuffle within the owner family. Park Se-chang, son of the former group chairman Park Sam-koo, would lose his title as chief executive of Asiana IDT as the IT service provider is one of the six affiliates included in the sale. Park Se-jin, the chairman’s daughter and senior executive at Kumho Resort, another sold-off unit, might also consider relocation.

The Kumho Group saw its finances deteriorate rapidly as a result of Park Sam-koo’s aggressive buying spree, which included the acquisition of Daewoo Engineering & Construction in 2006 and CJ Logistics in 2008. Saddled with debt, the company in April pledged to sell its crown jewel Asiana Airlines and other key assets in return for 1.6 trillion won in financial support from creditors.

Separately, Kumho Petrochemical Co. announced Wednesday it had no plans yet to sell its 11.1 percent stake in Asiana Airlines. “We did not invest in the company with an intention to get involved in management. We may consider unloading our holdings once the price sees a lift as a result of the sale,” a company official said.

Shares of Asiana Airlines finished Wednesday 4.56 percent lower at 6,280 won after closing the previous session up 12.9 percent.

By Noh Hyun, Song Gwang-sup and Kim Hyo-jin

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