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Korean Air and Asiana Airlines planes at local airports. (Yonhap) |
Korean Air plans to buy new shares worth 1.5 trillion won to be sold by Asiana, and buy bonds to be floated by the smaller airline, the company said in a regulatory document.
Korean Air, currently the world’s 18th largest, will acquire a 30.77 percent stake in Asiana from the debt-laden airline’s creditors led by the Korean Development Bank (KDB).
The state lender plans to invest 500 billion won in shares to be issued by Hanjin KAL and 300 billion won in the company’s convertible bonds.
Hanjin KAL, the holding company of airline conglomerate Hanjin Group, is expected to submit a letter of intent to the KDB earlier this week to proceed with the deal.
In its broader acquisition plan, Korean Air will gradually integrate three low-cost airlines, Jin Air Co. from Korean Air and Air Busan Co. and Air Seoul Inc. from Asiana, after completing the Asiana acquisition.
Asiana’s majority stake is held by Kumho Industrial Co., a subsidiary of the airline-to-petrochemical conglomerate Kumho Asiana Group.
In September, Asiana’s creditors, the KDB and the Export-Import Bank of Korea, decided to end a lengthy deal to sell Asiana to a consortium led by HDC Hyundai Development Co. over differences over the terms of the deal amid the COVID-19 Pandemic Extension.
The HDC-led consortium initially signed the deal to acquire Asiana from Kumho Industrial, as well as the new Asiana shares to be issued and the airline’s six affiliates, for 2.5 trillion won.
But the HDC then demanded a renegotiation with Kumho and the creditors over the terms and another round of due diligence in Asiana to reflect the impact of the pandemic on the airline industry.
The claim was rejected by the creditors. (Yonhap)
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