By Kyunghee Park and Seonjin Cha - 2012-08-31T07:03:22Z

Korea Aerospace Industries Ltd. (047810) shareholders plan to sell a 1.05 trillion won ($925 million) stake in the countrys only planemaker failed because of a shortage of offers.

Korean Air Lines Co. (003490) was the only bidder to register by the 3 p.m. deadline today, Korea Finance Corp. said in a statement. The shareholders will decide whether to hold another round of bidding after further discussions, it said without elaboration. At least two bids are needed because of rules governing sales by government entities.

Interest in the planemaker may have been damped by concerns about the impact of December presidential elections and objections to the sale raised by some lawmakers. The company expects to more than double orders this year as North Koreas militarization and rising defense spending in emerging markets spur demand for its helicopters and T-50 trainer jets.

Apart from the political risk, the bigger question is who will want to buy the company, said Justin Lee, a Seoul-based analyst at Nomura Holdings Inc. Itll take some time to find an owner as the deepening economic uncertainties discourage takeovers.

Korean Air, which already makes parts for Airbus SAS and Boeing Co., submitted a preliminary bid as it tries to expand its aerospace business. The company didnt say how much it would offer. The sale is being managed by Korea Development Bank and Credit Suisse AG.

Korea Finance is offering part of its 26 percent stake in Sacheon-based Korea Aerospace in the sale. It plans to remain the second-biggest shareholder. Hyundai Motor Co. (005380), Samsung Techwin Co. and Doosan Group are each selling 10 percent holdings.

The planemaker has a market value of $2.2 billion, according to data compiled by Bloomberg. The shares dropped 1 percent to close at 25,750 won in Seoul before the announcement. Korean Air rose 0.1 percent to 47,500 won.

Lawmakers have objected to the sale because of concerns about transparency. Korea Finance is acting hastily and placing the planemaker under private control may weaken public accountability, Chyung Ho Joon of the Democratic United Party said during a July 30 meeting of the National Policy Committee, a parliamentary body that oversees Korea Finance and other agencies.

Kim Jung Hoon of the ruling New Frontier Party also said at the same meeting that the current administration shouldnt rush the sale. His colleague Park Geun Hye is leading opinion polls ahead of the December election. President Lee Myung Bak will end his five-year term in February.

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Korea Aerospace Stake Sale Fails as Only Korean Air Bids