Nutty business: Korean Air’s Asiana buyout plan to face injunction
The proposed airline merger hoped to stabilise Korean aviation industy may look like the latest setting of Hanjin Group's Cho family feud.
November 20, 2020
By PLA Editor
Creditors’ plan to sell debt-laden Asiana Airlines to its bigger rival Korean Air faces a bumpy road as a local equity fund has filed an injunction against the plan, according to a report by Yonhap News.
On 17 November, Asiana’s main creditor, state-run Korea Development Bank (KDB), signed an investment agreement with Korean Air’s parent holdings company Hanjin KAL to inject 800 billion won (US$723 million) into Hanjin KAL through a rights offering and convertible bonds. Hanjin KAL will then participate in a 2.5 trillion-won (US$2.24 billion) stock sale by Korean Air for the purchase of Asiana.
A day later, the homegrown equity fund Korea Corporate Governance Improvement (KCGI), representing an alliance with Korean Air chairman’s elder sister, Cho Hyun-ah, filed an injunction against the KDB’s plan to join Hanjin KAL’s rights issue, saying the share sale to the third party will damage the Hanjin Group holding firm’s existing shareholders’ value.