Court Allows Hanjin Kal To Issue New Shares … Quick ‘Air Big Deal’

Korean Air has passed the first gateway to the acquisition of Asiana Airlines. Since the court rejected a request for a temporary injunction against the issuance of new Hanjin Kal shares, which was filed by private equity fund KCGI on day 1, the merger of the two main national airlines is expected to gain momentum.

Section 50 of the Seoul Central District Court Civil Settlement (Presiding Judge Lee Seung-ryun) rejected an interim injunction against Hanjin Kal by Grace Holdings, a target investment company under KCGI.

KCGI, which is in a management dispute with Hanjin Group Chairman Cho Won-tae, argued that Hanjin Kal’s third-party capital increase for the Korea Development Bank was a means of strengthening rights and control President Cho’s management. Order.

The court ruled that the issuance of new Hanjin Kal shares for a paid capital increase of 500 billion won at a tripartite allocation was within the scope necessary to achieve the management objectives of the Asiana Airlines acquisition and integrated management. from the airline. If the issuance of new shares proceeds, the structure of Hanjin Kal’s control over Hanjin Kal is likely to change, but it is not a decisive change. It was also reflected that Hanjin Kal and Korean Air were not in a financial position to easily reject KDB’s request.

Korean Air’s acquisition of Asiana Airlines will also proceed as scheduled, as the court raised Hanjin Kal and Saneun’s hand. Korean Air plans to invest 600 billion won, including 300 billion won in down payment and 300 billion won in permanent bonds, to Asiana Airlines this year, and make an interim payment of 400 billion won on the first quarter of next year.

The reorganization of the national aviation industry, which faced a major crisis due to the new coronavirus infection (Corona 19), is also expected to accelerate again. The merger of Korean Air and Asiana Airlines is expected to create the world’s top 10 national airline, as well as the three low-cost airlines (LCC) of the two companies that will be integrated in stages. As a result of this, there is the possibility of a major change in the domestic aviation market, such as the sale of other LCCs, which have also recently been difficult to manage.

In the case of Hanjin Group, it is predominantly seen that Chairman Cho will gain a slight edge in the participation competition with the tripartite alliance, including KCGI, Bando E&C and former Korean Air Vice Chairman Cho Hyun-ah. When the capital increase is completed, the KDB will hold approximately 10.7% of Hanjin Kal’s shares, but the stakes of Chairman Cho and the trilateral association will decrease. Instead, the KDB will most likely verify and monitor Hanjin Kal’s management in accordance with the investment agreement and empower Chairman Cho to focus solely on management. However, there are still many mountains to overcome until final integration, such as the reaction of the unions of the two companies, the examination of domestic and foreign business combinations and the normalization of management amid the prolonged COVID-19.

Hanjin Group said in a statement distributed to the media that day: “We respect the judgment of the court and will do everything possible to contribute to the enhancement of shareholder value and economic development as we overcome the crisis through this acquisition.” “In particular, Korean Air is well aware of the great significance and responsibility of the acquisition of Asiana Airlines. Above all, as part of the restructuring of the Korean aviation industry, we will do our best to overcome the crisis, strengthen competitiveness and stabilize jobs “. Emphasized.

“We welcome the wise judgment of the court,” KCGI said, saying, “After leaving the grueling arguments that have been asserted alongside KCGI, we will overcome the crisis of the domestic aviation industry, strengthen competitiveness, and stabilize the employment in the aviation industry. I ask you to do so. “According to the firing decision, the Bank of Korea announced on the 2nd that it will pay 500 billion won to Hanjin Kal as scheduled. It also plans to take over (300 billion won) of exchange bonds. using Korean Air shares as the underlying asset.

Reporter Park Sejun [email protected]