KAI sale fails to draw enough bidders

The sale of the state-run Korea Aerospace Industries is expected to be further delayed as its first public bidding failed to attract bidders other than Korean Air until the deadline at 3 p.m. Friday.

The leading flag carrier had submitted its letter of intent to acquire the nation’s only aircraft maker but its sole participation could not meet the legal conditions for a valid competition to continue the bidding process.

“We will discuss future plans including the schedule for the next bidding in a shareholders’ committee,” said an official from the Korea Finance Corporation, the largest shareholder of the KAI.

The financially-troubled KAI, like other public organizations whose privatization plans are disputed amid resistance from labor unions and political circles, seems likely to face difficulties for some time.

In July, Cho Yang-ho, chairman of Hanjin Group, which owns Korean Air, unveiled his willingness to purchase the KAI in a bid to seek positive synergy with the nation’s largest air carrier that also produces military aircraft.

But in a recent meeting with company executives, Cho allegedly hinted he could give up the bid if the acquisition price requested by the KAI would not be lowered further, group officials said Friday.

“The KAI sale is priced relatively high compared to international standards. If the final price is decided at the current level, it would not easy to acquire it,” he was quoted as saying by officials.

The total acquisition price of the KAI is estimated to be worth around 1.4 trillion won ($1.23 billion), considering its stock price at 26,000 won. Cho earlier said the company had secured 1 trillion won for the potential acquisition.

Korean Air, which plans to seek funding from global companies, said it will decide whether to continue joining the bidding after a new public notice of sale is released by the shareholders’ committee.

By Lee Ji-yoon (jylee@heraldcorp.com)