http://www.koreatimes.co.kr/www/biz/2019/03/488_265859.html
By Nam Hyun-woo
Asiana Airlines' credibility among investors further fell Friday after its share trading was halted following an auditor's negative opinion on the airline's financial status, according to analysts and officials Friday.
The company will be placed on the bourse operator's watch list, Monday, which many expect will force institutional investors to dump the firm's shares. Trading will resume, Tuesday.
According to the Korea Exchange (KRX), Korea's No. 2 air carrier was halted from trading Friday until Monday, following the audit report by Samil PricewaterhouseCoopers which issued a "qualified" opinion.
"Qualified" means that the auditor's auditing scope was limited because it could not gain more evidence for its decision or the company's financial records were not in accordance with generally accepted accounting principles. "Unqualified" opinion means a company's financial records are clean and do not have any misrepresentations.
The auditor explained it gave the negative opinion because it could not obtain evidence of debt from maintenance costs for the carriers' leased aircraft, collectable amounts of assets showing signs of damage and several other valuations of the company's assets.
The bourse operator will designate Asiana Airlines as a stock under surveillance on Monday, which is a warning to investors that the stock has the possibility of being delisted.
The KRX said being on the watch list does not necessarily mean that the stock is under a delisting review, but institutional investors will likely dump the shares because most investment firms have their own regulations of excluding such stocks from their portfolio.
"A decline in Asiana Airlines stock price seems to be inevitable as the market has lost trust in the company's financial records," Daishin Securities analyst Yang Ji-hwan said.
"Asiana Airlines said it will make efforts to acquire unqualified status as soon as possible, but that will be available only through the semiannual audit report."
Casting a deeper concern for the carrier is the audit report may drag down its poor credit rating further and trigger creditors to call in debts worth nearly 1 trillion won.
To cope with its liquidity shortage, Asiana Airlines has been issuing asset-backed securities throughout last year, the outstanding amount is worth 1.2 trillion won.
In issuing those securities, the company has obliged itself to repay the debts earlier than mature dates when its senior corporate bonds rating fell below the current BBB rated by the Korea Investors Service. If the rating house make a cut in the ratings, the carrier's liquidity problems will be aggravated, analysts said.
The financial report bungle will likely trigger setbacks in its parent group's efforts to address its financial troubles. Kumho Asiana Group sold its headquarters building in central Seoul last year for liquidity and is preparing for the initial public offering of Kumho Buslines, which is a de facto holding company of the group.
[구조분석]
(S)/ (V)/ (O)/ (pre+N)/ (의미상O)/
Asiana Airlines' credibility (S)/among investors (pre+N)/further fell(V)/ Friday [(접속사)/ after its share trading(S)/ was halted (be+pp)/ following (ing)/ an auditor's negative opinion (의미상O)/on the airline's financial status(pre+N)/, according to analysts and officials Friday(pre+N)/.
The company (S)/will be placed (be+PP)/on the bourse operator's watch list(pre+N)/, Monday, [(한정사)/ which many expect (S)/will force (V)/institutional investors (O)/to dump(to V:OC)/ the firm's shares(의미상O)/]. Trading will resume, Tuesday.
According to the Korea Exchange (KRX)(pre+N)/, Korea's No. 2 air carrier (S)/was halted(be+PP)/ from trading (pre+N)/Friday until Monday(pre+N)/, [(현재분사)/ following the audit report (의미상O)/ by Samil PricewaterhouseCoopers(pre+N)/ [(관계사)/which issued(V)/ a "qualified" opinion(O)/.
"Qualified"(S)/ means(V)/ [(접속사:O)/that the auditor's auditing scope (S)/was limited(be+PP)/ {because(접속사)/ it (S)/could not gain(V)/ more evidence(O)/ for its decision(pre+N)/ or (등위접속사)/ the company's financial records(S)/ were not (V)/in accordance(pre+N)/ with generally accepted accounting principles(pre+N)/. "Unqualified" opinion(S)/ means(V)/ [(접속사:O)/ a company's financial records (S)/are(V)/ clean (SC)/and (등위접속사)/ do not have (V)/ any misrepresentations(O)/].
The auditor(S)/ explained(V)/ [(접속사)/it(S)/ gave(V)/ the negative opinion(O)/ because(접속사)/ it(S)/ could not obtain(V)/ evidence(O)/ of debt(pre+N)/ from maintenance costs(pre+N)/ for the carriers' leased aircraft(pre+N)/], [(동격)/collectable amounts of assets(pre+N)/ showing(ing)/ signs(의미상O)/ of damage(pre+N)/ and (등위접속사)/ several other valuations(의미상O)/ of the company's assets(pre+N)/.
The bourse operator (S)/will designate(V)/ Asiana Airlines(O)/ as a stock under surveillance (pre+N)/on Monday(pre+N)/, [(관계사)/which is(V)/ a warning(SC)/ to investors(pre+N)/ [(접속사:DO)/ that the stock(S)/ has (V)/the possibility(O)/ of being delisted(pre+N: ing+PP)/.]
"A decline(S)/ in Asiana Airlines stock price(pre+N)/ seems(V)/ to be inevitable (to V)/ [(접속사)/as the market(S)/ has lost(V)/ trust (O)/in the company's financial records(pre+N)/," Daishin Securities analyst Yang Ji-hwan said.
"Asiana Airlines(S)/ said (V)/ [(접속사)/ it(S)/ will make(V)/ efforts(O)/ to acquire(to V)/ unqualified status(의미상O)/ [as soon as] possible, but (등위접속사)/] [(관계사)/that will be(V)/ available(SC)/ only through the semiannual audit report.(pre+N)/"
Casting a deeper concern for the carrier (ing:S)/is (V)/ [(접속사)/ the audit report(S)/ may drag down(V)/ its poor credit rating(O)/ further and (등위접속사)/ trigger(V)/ creditors (O)/to call in(toV)/ debts worth nearly 1 trillion won(pre+N)/.
To cope(toV)/ with its liquidity shortage(pre+N)/, Asiana Airlines(S)/ has been issuing(V)/ asset-backed securities (O)/ throughout last year(pre+N)/, the outstanding amount(S)/ is(V)/ worth 1.2 trillion won(SC)/.
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