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Hanjin Group board of directors decides to take over Asiana Airlines
Total acquisition fund 1.8 trillion won
Korean Air to Raise 2.5 Trillion Won Capital Raise Early Next Year
The acquisition and merger of Asiana Airlines by Korean Air is on the rise. The government held a meeting of related ministers to strengthen industrial competitiveness and decided to invest in Hanjin Group by the Korean Development Bank, and Hanjin Kal and Korean Air decided to take control of Asiana Airlines on the board of directors. Following the government’s decision, the resolution of the Hanjin Group board of directors took place almost simultaneously.
Hanjin Group announced on the 16th that the holding companies Hanjin Kal and Korean Air held their respective board meetings and decided to acquire Asiana Airlines. Given that the global aviation industry is in crisis due to the new coronavirus infection (Corona 19), the acquisition of Asiana Airlines by Korean Air is expected to signal the reorganization of the domestic aviation industry.
A total of 1.8 trillion won is required for Korean Air to acquire Asiana Airlines. Early next year, he plans to raise funds for the acquisition through a capital increase of 2.5 trillion won. Under a contract with the KDB Development Bank, Hanjin Kal secured a total of KRW 800 billion, including KRW 500 billion as a paid capital increase allocated to a third party, and KRW 300 billion through exchange bonds, to participate on the Korean Air paid raise. Rado Korean Air and Asiana Airlines will lend the total amount of 800 billion won to Korean Air immediately after the Korean Development Bank investment so that they can use the funds to overcome the Corona 19 crisis.
With this financing, Korean Air will acquire 300 billion won of permanently convertible bonds from Asiana Airlines and will allocate 300 billion won in advance for the acquisition of 1.5 trillion won. In this case, Asiana Airlines will be able to secure the operating funds until the end of the year, breathing the operation of the funds, and improve the financial structure by adding additional capital to 300 billion won in permanent bonds. The reason for the decision is that Hanjin Kal will be able to maintain a stable holding company system while securing a stake in Hanjin Kal in Korean Air by participating in Korean Air’s paid-in capital increase. Hanjin Kal also decided to promote a paid-in capital increase through a third-party allocation method that can expand capital quickly and reliably taking into account the urgency of the matter and the financial structure may deteriorate if the full loan of 800 billion won from KDB Development Bank. Hanjin Group explained: To minimize the inflow of public funds given the current crisis in the aviation industry, it is urgent to reorganize the aviation industry, including not only Korean Air and Asiana Airlines, but also LCC companies such as Jin Air and companies. related to aviation. Hanjin Group explained that the new shares KDB will have are ordinary shares with voting rights. Through this, the Korean Development Bank said it will play a role of monitoring and verifying whether Hanjin Kal and Korean Air are promoting the restructuring.
Hanjin Group said that the main reason Korean Air decided to participate in the acquisition of Asiana Airlines was for the rapid stabilization of the domestic aviation industry, which is about to suffer from Corona 19. In a situation where not only Asiana Airlines but also Korean Air may face a dangerous situation if the Corona 19 crisis continues, the plan is to ensure fundamental competitiveness through the restructuring of the aviation industry. He also emphasized that it is intended to help reduce the burden on the public by reducing the contribution of public funds.
According to Hanjin Group, Korean Air initially thought long and hard about the decision to take over Asiana Airlines, but based on the founding philosophy of the ‘transportation office’, it made such a bold decision to preserve the jobs of the two airlines and companies. related and contribute to the development of the Korean aviation industry. I got off.
When Korean Air completes its acquisition of Asiana Airlines, it will be assessed to become the world’s top 10 global network airline. Most countries with a population of less than 100 million have only one network airline. Until now, Korea has been relatively inferior to the competition with airlines from major advanced countries such as Germany, France, Hong Kong and Singapore due to its multiple systems. However, through this acquisition, Korean Air is expected to lay the foundation to compete with the world’s mega airlines on key indicators such as route network, aircraft and scale of supply.
Hanjin Group hopes that the integration of the two companies will improve the efficiency of the road operation and increase competitiveness through cost reduction. The plan is to further drive the growth of the domestic aviation industry by expanding joint ventures with global airlines and actively attracting overseas transit demand based on expanding the airport’s central airport market share. Incheon (aircraft takeoff and landing capabilities).
A Hanjin Group official said: “Consumers have a wider choice of routes and schedules, and can expect greater convenience through improved connections and integrated mileage usage.” This further improvement is expected to contribute to improving the competitiveness of Incheon International Airport, which aims to become the representative hub airport for Asia. ”
Journalist Min-beom Kim from Dong-A.com [email protected]
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