The South Korean government will provide 2.4 trillion won ($2 billion) to full-service Asiana Airlines from a state fund dedicated to protect key industries from the virus pandemic woes as the prolonged crisis killed the country’s biggest airline M&A deal.

Kumho Industrial officially ended the contract to sell its majority stake in Asiana Airlines for 2.5 trillion won first signed in December last year. Primary state lender Korea Development Bank (KDB) and the government on Friday held a meeting to launch the Plan B to keep the airliner afloat.

KDB and another state lender Export-Import Bank of Korea which already put in 3.3 trillion won in the troubled airliner over the past two years will package another 2.4 trillion won – 1.9 trillion won in loans for operation and 480 billion won in purchase of convertible bonds. The state banks also will provide 120 billion won to Kumho Bus Lines to ease its liquidity woes due to the flop in the stake sale.

Under the management of state-led creditors, restructuring would take place to raise the corporate value of Asiana Airlines as well as Kumho units for asset sale to redeem public funding. Creditors are expected to attempt to sell budget carriers Air Busan and Air Seoul and a golf course under Kumho Resort.

By Song Gwang-sup and Seo Hye-seung

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]