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Korean Air-Asiana Airlines merger proceeds without restructuring▶ Click here to enlarge
korean air[003490]And Asiana Airlines[020560]The court ruling that will decide the fate of the consolidation comes to light on day 1.
According to the legal profession, the 50th Civil Settlement Division of the Seoul Central District Court (Judge Lee Seung-ryun)[180640]On this day, it will be decided whether to cite or reject a request for an injunction against the issuance of new shares.
Previously, KCGI requested an interim injunction, saying that the fundraising method for Korean Air’s acquisition of Asiana Airlines was illegal, and requested to invalidate the issuance of new shares for Hanjin Kal’s third-party paid capital increase, in the one in which the Korea Development Bank participates.
The judiciary entered into a temporary court order on the 25th, listened to the views of both parties, and received a written rebuttal to review the law.
It is reported that the judiciary has focused on justifying the purpose of issuing new shares, the suitability of the means, and whether there are alternatives for issuing new shares.
KCGI maintains that Korean Air’s acquisition of Asiana Airlines, which is carried out by investing 800 billion won in Hanjin Kal, was aimed at defending the management rights of Hanjin Group Chairman Cho Won-tae.
KCGI emphasized that it is procedurally illegal for the management of a company in dispute over management rights to decide to issue new shares excluding shareholders.
He argued that there are alternatives to raise funds for the acquisition of Asiana Airlines without changing the current participation structure. KCGI’s alternatives are the issuance of bonds, the increase of capital to shareholders and financing through the sale of assets.
On the other hand, Hanjin Group said: “Although there is a plan to secure the share capital without the burden of repayment of the new shares assigned to a third party, the issuance of bonds subject to the obligation to repay the principal and interest or claim to sell assets, which is a continuous source of income, is an urgent selfish argument that only maintains the proportion of ownership rather than the profits of the company. ” He refuted that the KCGI alternative is not viable.
While the court decides whether to take over Asiana by citing or dismissing the request for interim injunction, the industry is interested in the court’s decision.
KCGI insists that “we must honestly admit that the settlement is possible regardless of the outcome of the trial,” but KCGI said that “(if cited), the combined transaction with Korean Air and Asiana Airlines will inevitably be destroyed.” I said.
If the court dismisses the request for interim injunction, the acquisition is expected to accelerate. Korean Air plans to pay the advance for the Asiana Airlines acquisition within this month using funds guaranteed by KDB’s investment.
If the decision to issue new shares is no longer valid, KDB’s investment will also be prohibited and Korean Air will not be able to raise funds to acquire Asiana Airlines.
To escape the liquidity crisis caused by the new coronavirus infection (Corona 19), it is difficult for Korean Air, which is selling its assets, to separately raise funds to acquire Asiana Airlines worth more than 1 trillion won.
As the main national companies have already announced that they do not intend to acquire Asiana Airlines, it seems difficult to find a new acquirer in the short term. In this case, Asiana Airlines has no choice but to initiate the restructuring under the management of the creditors.
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