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SEOUL: Korean Air Lines said on Monday (November 16) that it will spend 1.8 trillion won (US $ 1.62 billion) to become the largest shareholder in the indebted Asiana Airlines Inc, in a deal that would create the 15th largest airline in the world.
The suitor plans to issue shares worth 2.5 trillion won next year to fund the deal with buyers, including his own parent, Hanjin Kal.
He did not specify how he would spend the rest. Asiana’s state creditor, the Korea Development Bank (KDB), said the 2.5 trillion won will include liquidity and funds for integration efforts such as consolidation or closing redundant businesses.
KDB also said that it will invest 800 billion won in Hanjin Kal.
Korean Air is likely to buy the 30.77% stake in Asiana held by Kumho Industrial, Yonhap reported without citing sources.
Neither Kumho nor Asiana were immediately available to respond to Reuters requests for comment.
Hanjin Kal’s largest shareholder, the Korea Corporate Governance Improvement Fund (KCGI), has said that any investment by KDB would likely support current management. The activist fund favors the replacement of executives appointed by the family by strangers.
The combination of South Korea’s two largest airlines would create the world’s 15th largest airline by industry measure of kilometers flown by paying passengers, according to 2019 data from the International Air Transport Association. That represents a jump from 28th place for Korean Air and 42nd for Asiana.
Asiana’s share price jumped 28.7 percent in trading Monday, while Korean Air’s rose 8.4 percent and Hanjin Kal’s 3 percent. The benchmark KOSPI index was up 2%.
