Korean Air to spend $1.6b to become top shareholder in debt-laden Asiana Airlines

Photo: Reuters

Korean Air Lines Co Ltd on Monday said it will spend 1.8 trillion won ($1.62 billion) to become the largest shareholder of indebted Asiana Airlines Inc, in a deal that would create the world’s 15th biggest carrier.

The suitor plans to issue 2.5 trillion won worth of shares next year to fund the deal with buyers including its own parent, Hanjin Kal.

It did not specify how it would spend the remainder. Asiana‘s state-run creditor Korea Development Bank (KDB) said the 2.5 trillion won will include liquidity and funds to conduct integration efforts such as the consolidation or closure of redundant businesses.

KDB also said 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 Co Ltd, 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 any KDB investment would likely support current management. The activist fund favours replacing family-appointed executives with outsiders.

Combining South Korea’s two biggest carriers would create the world’s 15th largest airline based on the industry measure of kilometres flown by paying passengers, according to 2019 data from the International Air Transport Association. That represents a jump from 28th for Korean Air and 42nd for Asiana.

Asiana‘s share price soared 28.7% in Monday trade, while that of Korean Air rose 8.4% and Hanjin Kal rose 3%. The benchmark KOSPI was up 2%.

Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.